Cayman Islands Panel Discussion
06 Aug 2025
Industry leaders explore how the Cayman Islands is maintaining its dominance as a global funds domicile amid evolving regulation, rising investor expectations and emerging digital asset trends
Image: mikolaj_niemczewski/stock.adobe.com
Samantha Widmer, Associate Director, Funds & Capital Markets, Cayman Finance
Pranav Variava, Head, Investments Supervision Division, CIMA
Christopher Bouck, Deputy Head, Investments Supervision Division, CIMA
Michelle Majid, Deputy Head, Financial Stability & Macroprudential Monitoring, CIMA
Niall Gallagher, Managing Director, Citco Trustees (Cayman)
Geoff Ruddick, Managing Director and Country Head, Cayman Islands, Hawksford
Kendell Pierre, Chief Compliance Officer, MUFG Investor Services
How has the Cayman Islands’ position as a leading funds domicile evolved in recent years, and what key trends are you observing in terms of fund formations and asset flows compared to competing jurisdictions?
Geoff Ruddick: The Cayman Islands has shown remarkable resilience and adaptability in the face of global market uncertainty, particularly post-pandemic. While other jurisdictions have faced headwinds, Cayman has rebounded strongly, reaffirming its position as the preferred domicile for fund managers and investors from around the world. As of 31 December 2024, there were 12,858 funds registered under the Mutual Funds Act in Cayman — a testament to the continued strength of its offering. We have seen particular growth in private credit, private equity, and digital asset strategies — including crypto funds and tokenised investment structures. Segregated Portfolio Companies (SPCs) continue to gain traction due to their flexibility. The industry continues to diversify, with long-short and long-only equity strategies remaining dominant, while macro, multi-strategy, and fund of funds structures are maintaining significant market share.
Interestingly, there is a shift away from the traditional ‘classic’ master-feeder model, particularly among Asian and European managers, towards more cost-efficient single and double-legged structures. Cayman exempted companies and stand-alone funds remain a popular vehicle of choice, largely due to their versatility and efficiency.
Compared to many competing jurisdictions, Cayman remains highly competitive on speed-to-market and operational flexibility. While institutional strategies may sometimes lean toward these other centres for specific regulatory or investor-driven reasons, Cayman’s infrastructure, regulatory landscape together with the fact that investors are familiar with it, continues to position the jurisdiction ahead of the curve.
Niall Gallagher: The Cayman Islands has been unwavering in its commitment to the financial services industry and it is the cornerstone of the economic success of the jurisdiction over many years. Successive governments have championed the Cayman Islands in this regard and have put in place policies that have allowed the funds industry to thrive whilst at the same time keeping a keen eye on ensuring that the appropriate regulation and legislation are in place to protect all stakeholders.
While many fund domiciles are growing and strengthening, the Cayman Islands is still very much leading the way when it comes to hedge and private equity (PE) funds.
Indeed, the popularity of Cayman from a PE perspective is clearly borne out by the figures; since the introduction of the Private Funds Act, 2020, the Cayman Islands has seen the registration of over 17,500 private funds.
From an asset flow perspective, we are seeing continuous strong demand from family offices and high-net-worth investors, particularly in the private asset space. Indeed, overall, the increasing sophistication of the family office sector is driving demand for a wide range of services as these investors seek institutional expertise to support their growth strategies.
Samantha Widmer: The Cayman Islands has strengthened its position as the world’s premier offshore funds domicile in an increasingly complex global macroeconomic and regulatory environment. Over the past few years, Cayman has experienced sustained growth in fund registrations by being responsive to evolving market needs and offering sophisticated, flexible structures to managers and investors worldwide.
As of 30 June 2025, the Cayman Islands Monetary Authority reported 30,699 registered Cayman funds. They included 13,090 mutual funds, which are mostly hedge funds, and 17,609 private funds.
Since 2020, private fund registrations have increased by 38.7 per cent, and mutual fund registrations by approximately 10 per cent. This growth outpaces most competing jurisdictions and underpins the Cayman’s continued dominance as a domicile for hedge funds and private equity funds.
The US Securities and Exchange Commission’s (SEC’s) private funds statistics show that the Cayman Islands accounts for almost a third (31.6 per cent) of the net assets of US private funds included in the data, and for more than half (53.6 per cent) of all qualifying hedge funds’ net assets reported to the SEC.
As a fund domicile, Cayman offers a range of benefits. The tax-neutral regime, which avoids double taxation, a trusted legal infrastructure based on English common law, efficient and internationally recognised regulation, and a large pool of professional service providers. As such, the jurisdiction continues to be a preferred destination for US, Asian, European and increasingly Middle Eastern fund sponsors.
Kendell Pierre: It is evident that Cayman remains the premier jurisdiction for fund domicile. This remarkable achievement is a testament to the collective hard work, dedication, and the strategic decisions of the entire financial services industry made along the way. The total number of funds registered with the Cayman Islands Monetary Authority (CIMA) is at an all-time high.This incredible achievement is partly fueled by a surge in private equity activity, with 2024 marking the highest number of private funds registered since the introduction of the Private Funds Act in 2020.
Flexible legislation, political and economic stability, and the quality and depth of the local service providers have provided the foundation for this continued growth and is the ideal platform for any future developments.
Pranav Variava: The Cayman Islands has long been established as a premier jurisdiction for the domiciliation of alternative investment funds, especially private equity and hedge funds. This stance has been strengthened over the last few years by steady increases in asset flows and fund registrations, supported by a flexible legal framework, advanced regulatory monitoring, and the jurisdiction’s well recognised tax neutrality. With more than 30,000 alternative investment funds established and managing a combined net asset value of over US$8 trillion, 2024 saw a record high in fund formations.
As the jurisdiction continues to draw a wide range of international fund and institutional investors, its quantitative growth reflects the qualitative strength.
Looking ahead, CIMA is committed to addressing emerging trends in the financial sector. Beyond regulating traditional financial services, the authority has prioritised digital transformation, fintech innovation, and sustainable finance initiatives, further cementing its position as a forward-thinking leader in the global financial industry.
Strong growth in private funds and modest but consistent growth in traditional mutual funds are two major trends influencing fund formations. Notably, Cayman private funds have grown by around 5 per cent annually, indicating trust in Cayman’s operational infrastructure and regulatory framework. With a growing demand for funds built on digital assets and ESG-related investments, the fund sector has also become more diversified.
CIMA has observed an increasing interest in fintech and blockchain assets, particularly in tokenised funds. To date, three applications for tokenised funds have been approved, and we are continuing to receive heightened interest in this category of funds. Additionally, CIMA is collaborating with the government to establish a specific regulatory framework for tokenised funds.
What impact have recent regulatory developments — including the Private Funds Act, beneficial ownership requirements, and economic substance regulations — had on fund establishment costs, operational complexity, and client decision-making processes?
Christopher Bouck: The recent regulatory developments, notably the Private Funds Act, enhanced beneficial ownership regimes, and economic substance regulations, have significantly influenced the cost structures and operational complexities associated with the establishment and administration of funds in the Cayman Islands. However, these developments are a step in the right direction which further aligns Cayman Islands’ regulatory framework with global best practices of and recommendations of supranational stakeholders such as the Organisation for Economic Co-operation and Development (OECD), European Union (EU), and the Financial Action Task Force (FATF).
The Private Funds Act has established more robust standards for fund governance mandating enhanced disclosures and transparent management of conflicts of interest. Although these regulations may have increased compliance costs, they bolster investor confidence in governance and transparency, a trade-off that many managers consider vital for maintaining market credibility.
The implementation of uniformly mandatory beneficial ownership disclosures, as stipulated by the Beneficial Ownership Transparency Act, has greatly improved the Cayman Islands’ anti-money laundering (AML) and counter-terrorism financing framework. Fund structures are now required to maintain and report accurate and current beneficial ownership information to the Registrar of Companies, while key stakeholders must undergo rigorous fitness and propriety assessments by CIMA.
This regulatory framework adds an extra administrative burden during both the fund launch and ongoing maintenance phases, but it significantly enhances the jurisdiction’s global reputation and its capacity to combat illicit activities.
Economic substance legislation, mandated by international standard-setting organisations such as the OECD and EU, requires certain entities in the Cayman Islands to demonstrate substantial local activity, which incurs costs related to office space, local staffing, and governance controls. Although this initially raised concerns regarding the attractiveness of the Cayman Islands, the jurisdiction provides well-structured guidance and exemptions tailored to specific entity types, thereby balancing compliance requirements with commercial viability. Fund managers and service providers have adapted their operational models to ensure compliance in a cost-effective manner.
While the costs may have increased, CIMA’s ongoing efforts in digitisation and a risk-based supervisory approach are helping to alleviate these concerns in terms of improved turnaround times. From the perspective of an entity’s decision-making, clear and upfront communication regarding these requirements and associated costs is essential for maintaining transparency. Notably, these regulatory advancements highlight the jurisdiction’s commitment to aligning with global standards, thereby minimising the risk of blacklisting and improving access to institutional investors who value stringent governance and compliance.
The Cayman Islands’ continued ability to adapt to international regulatory standards has been crucial for effective supervision and in preserving its reputation as a leading global financial center.
While these measures may have additional compliance costs, they also present significant opportunities. By aligning with global standards, the Cayman Islands enhances its reputation as a well-regulated and compliant jurisdiction, which is attractive to international investors and businesses. As global regulatory expectations tighten, being ahead of the curve in terms of compliance gives the Cayman Islands a competitive edge, particularly in sectors like private equity, hedge funds, and cryptocurrency funds, where investors prioritise the importance of regulatory certainty.
Furthermore, alignment with international standards can attract more sophisticated capital, including institutional investors such as pension funds, sovereign wealth funds, and high-net-worth individuals, who require assurance that their investments are safeguarded from regulatory or reputational risks.
Ruddick: The introduction of new regulations, including the Private Funds Act, has certainly increased baseline operational complexity — but in many ways, it has formalised and standardised what were already widely adopted best practices. For serious market participants, the impact has been manageable, and these changes have enhanced Cayman’s credibility on the global stage.
The beneficial ownership (BO) regime has added an administrative layer, typically handled efficiently via service providers and legal counsel. Similarly, economic substance rules have had a minimal direct impact on the funds themselves, applying more meaningfully to fund managers with local operations. Nonetheless, these developments contribute to a slightly more involved setup process, especially for new entrants or less-experienced managers.
That said, the Cayman ecosystem — legal advisors, administrators, and governance professionals — has adapted quickly. These professionals continue to play a key role in absorbing complexity and helping clients navigate the evolving landscape. As a result, we have not seen a material deterrent to fund establishment in Cayman — rather, these developments have helped reassure investors about Cayman’s regulatory robustness.
Widmer: Recent regulatory developments have introduced greater compliance and oversight requirements for Cayman-domiciled funds. Far from undermining the jurisdiction’s appeal, these changes have strengthened its reputation for sound governance and reinforced its standing among global investors and regulatory bodies.
The introduction of the Private Funds Act marked a significant milestone, aligning the Cayman Islands’ regulatory framework with evolving international standards for transparency and investor protection. Key provisions include mandatory registration with the Cayman Islands Monetary Authority (CIMA), annual audits, and the implementation of independent oversight functions such as valuation, cash monitoring, and safekeeping of fund assets.
These reforms have also supported the jurisdiction’s efforts to meet the recommendations of the FATF, further demonstrating Cayman’s commitment to global best practices in AML and counter-terrorist financing (CTF).
These changes have contributed to the costs of establishing and operating a fund, as managers now face mandatory service provider appointments and more rigorous reporting obligations.
Similarly, the enhanced beneficial ownership framework requires entities to maintain detailed registers. Economic substance rules, while initially aimed at relevant operating entities rather than investment funds, have also introduced additional filings and considerations when structuring vehicles for asset management and holding purposes.
Taken together, these regulatory shifts mean that fund sponsors must now plan for a more structured establishment process. However, there has been no overall negative impact. For many managers and investors, the presence of a robust, transparent regulatory framework is a benefit rather than a drawback.
Cayman’s ability to balance global standards with commercial pragmatism remains a distinguishing factor. It reinforces, rather than undermines, Cayman’s competitiveness.
Gallagher: Regulatory developments are constantly evolving and the industry continues to evolve with it. Investors take comfort that these developments protect their interests while general partners (GPs) have an opportunity to differentiate themselves through operational efficiencies. Increasing regulatory developments have driven cost increases but these are really only marginal, and their implementation has caused minimum disruption.
Changes to the beneficial ownership regime announced in 2023, and the introduction of economic substance requirements, were flagged in advance, and also aligned internationally with other jurisdictions. Therefore, they did not impose any significant challenges.
The Private Funds Act has been a tremendous success; the Act essentially codifies best practice standards across the industry. Operationally, we have seen clients adopting strong governance frameworks which actually benefit the industry and instill confidence in the product.
From a regulatory perspective, CIMA has been providing data to the industry in the form of reports of the findings from their Thematic Reviews which can underscore areas they see as requiring the attention and focus from stakeholders; whilst at the same time being in a position to hold the industry to account through risk-based monitoring of the sector.
How do you assess the Cayman Islands’ competitive advantages against other major domiciles, particularly regarding regulatory flexibility, tax neutrality, and time-to-market for fund launches, and where do you see the most significant challenges?
Gallagher: The Cayman Islands is second to none. The jurisdiction has a no direct taxation policy which has allowed it to flourish as a funds domicile. Caymans fund products provide market participants with certainty, and this in turn means that the time-to-market for fund launches remains extremely competitive, typically less than three months.
Widmer: Cayman’s competitive advantages remain strong, particularly in three key areas: regulatory flexibility, tax neutrality and time-to-market.
The jurisdiction offers a range of fund structures — such as exempted companies, exempted limited partnerships, segregated portfolio companies and unit trusts — that are familiar to international investors and adaptable to a wide variety of strategies and asset classes. This flexibility has made Cayman appealing for managers launching funds across traditional and innovative sectors, including digital assets and ESG-focused investments.
Tax neutrality is a key reason why the Cayman Islands remains attractive to global investors. Since there are no local taxes on income, capital gains, or profits, funds can operate efficiently without adding extra tax layers at the fund level. This is especially useful for complex, cross-border investment structures. Importantly, investors still pay taxes in their home countries — Cayman’s system simply avoids unintended tax complications within the fund itself.
In terms of time-to-market, Cayman is known for its streamlined regulatory process. With the implementation of CIMA’s online REEFS portal, many funds can be registered and launched within a matter of weeks, provided that their service providers are aligned and documentation is in order. This speed, combined with legal certainty and minimal regulatory red tape, is a significant draw for fund managers under pressure to deploy capital efficiently.
That said, the most significant challenges ahead include increased regulation and competition for professional talent. Compliance, including audits, valuations, and cross-border reporting, has become more complex. Meanwhile, competition for talent is another pressing issue, with a growing need to attract and retain skilled professionals to support industry growth.
Pierre: The statistics do not lie and with more than 50 per cent of the world’s funds domiciled in the Cayman Islands, Cayman is clearly the choice for fund entities. I see this in a number of areas:
Regulatory flexibility — with more than three decades of experience servicing the funds industry, the Cayman Islands have grown through innovation and forward-looking policies that embody best practices and have served as a blueprint for others. The Cayman Islands has a mature and well-respected legal and judicial system that’s primarily based on UK common law. Over the years, Cayman’s legal framework has evolved to accommodate various fund structures and investment strategies. The flexibility, strength, and integrity of the AML regime was demonstrated through enhancements of the corporate governance regime. The positive outcome of the FATF inspection and subsequent reporting following improvement measures implemented in the jurisdiction promote stakeholder confidence.
Tax neutrality — the fact that Cayman does not add an extra layer of taxes on transactions taking place there is an attractive factor for fund vehicles. Taxes on the income, capital gains, or dividends of certain Cayman-domiciled entities can be structured so they are not applicable for a period. This does not take away from the significant role that the jurisdiction plays in global efforts to combat tax evasion through legislation, regulation, and automatic tax information sharing arrangements that uphold the highest international standards for transparency and cross-border cooperation under regulations such as the OECD Common Reporting Standard (CRS) and US Foreign Account Tax Compliance Act (FATCA).
Time-to-market — the Cayman Islands is in a favorable time zone, with premier law, accountancy, corporate services, and investments professionals that are employed by some of the world’s leading firms. Their expertise ensures efficient fund administration, compliance, and governance. Under their stewardship, Cayman boasts a robust and quick launch and registration process for investment funds and fund managers facilitating a rapid, yet comprehensive, launch that positions businesses to secure opportunities in a fast-paced market.
The main challenges are perception, cost, and the ever-evolving geopolitical landscape. For years, Cayman has been fighting the stigma of having lower AML standards that create difficulties for the financial services sector. This will be mitigated by the recent FATF endorsement of the AML regime. Cost will always be an issue as inflation rises and companies focus more and more on managing their expenses, however, costs are generally aligned with other offshore jurisdictions. Finally, monitoring requirements for any proposed regulatory changes, assessing the impact, and implementing change in this rapidly changing environment is a challenge that every jurisdiction faces.
Ruddick: Cayman’s core strengths remain as compelling as ever. It offers genuine tax neutrality — a feature that is well understood and valued by institutional investors around the globe — and a flexible, business-friendly regulatory regime. The jurisdiction’s time-to-market advantage is especially notable: new funds can be launched in one to two weeks, whereas competing jurisdictions may require months to achieve the same. The local ecosystem is a key differentiator: Cayman boasts a critical mass of experienced professionals across legal, audit, governance, accounting, and fund administration. Independent governance has become an established best practice — in fact, 70 per cent of new corporate funds in 2024 appointed all or a majority of independent directors. General partner structures are following suit, increasingly introducing independent oversight.
The outsourcing of AML officer roles to independent providers is another hallmark of Cayman’s maturity — especially for institutional or large-scale managers looking for robust oversight without sacrificing efficiency.
That said, there are challenges. The cost of compliance continues to rise, and misperceptions from onshore regulators or the media — particularly around tax or transparency — can distort Cayman’s image. Global regulatory convergence is also creating pressure, as initiatives in the EU, UK, and US aim to harmonise requirements that were once jurisdictionally specific. Cayman must strike the balance between maintaining flexibility and ensuring alignment with international expectations.
Michelle Majid: The primary competitive advantages of the Cayman Islands are its tax-neutral environment, regulatory adaptability, and swift fund launch timelines. The jurisdiction does not impose corporate, income, capital gains, or withholding taxes on funds or investors, which helps to maintain returns and streamline cross-border fund operations. This tax neutrality is a fundamental aspect that is highly regarded by global private capital, particularly in intricate multi-jurisdictional fund structures. Additionally, the regulatory framework is tailored to offer customised structuring options — such as limited partnerships or segregated portfolio companies — with minimal interference, allowing fund managers to execute a variety of investment strategies with flexibility.
Regulatory adaptability is demonstrated by CIMA’s practical approach, particularly under the Private Funds Act and the revised Mutual Funds Act, where requirements are calibrated according to risk and designed to fulfill investors’ due diligence expectations without burdensome bureaucracy. The time required to launch funds is relatively brief. The jurisdiction provides expedited registrations backed by a substantial pool of specialised professionals who are well-versed in CIMA’s procedural intricacies, facilitating a seamless launch experience that promotes rapid capital deployment.
CIMA has effectively struck a balance between regulatory compliance and innovation by implementing policies that promote competitiveness in an ever-changing global market. The Cayman Islands has aligned its regulatory framework with international standards, such as the OECD’s CRS, to reinforce its commitment to tax transparency and maintain credibility on the global stage. While compliance is vital to global competitiveness, the jurisdiction also embraces innovation to address emerging trends such as fintech, blockchain, and ESG investing.
This dynamic approach allows the Cayman Islands to foster the development of new financial products and services without compromising high regulatory standards. Tailored solutions, such as those tailored for tokenised funds, blockchain ventures, and sustainable finance initiatives, showcase this balance, enabling service providers to innovate while ensuring compliance.
Nevertheless, challenges arise in a changing regulatory environment marked by heightened global standard harmonisation, increased scrutiny on AML and substance, and a growing demand from investors for ESG disclosures and impact reporting. Moreover, rising operational costs associated with compliance complexity pose a risk of pricing out smaller fund managers or new entrants to the market. Mitigating reputational risks amid increasing geopolitical scrutiny and tightening global tax policies necessitates ongoing vigilance. It is essential to ensure that the jurisdiction is not merely viewed as a low-tax haven, but rather as a well-regulated and transparent financial center, which is crucial for maintaining investor trust and market access. The capacity to incorporate emerging asset classes, such as digital and tokenised funds, while upholding regulatory clarity will be vital for preserving Cayman’s competitive superiority.
What operational and compliance considerations do fund administrators face when servicing Cayman-domiciled funds, especially regarding cross-border reporting requirements, FATCA/CRS compliance, and managing multiple regulatory frameworks?
Gallagher: Developing appropriate software tools and hiring the right people are the core components to adhering to regulatory obligations in respect of cross-border reporting requirements. The rules and frameworks governing various cross-border reporting regimes carry a high degree of technical competence, particularly when you may also need to consider elements of tax treaties where the rules governing an obligation are silent or opaque. Having appropriate software solutions that can navigate the requirements in conjunction with a talented pool of professionals with sectoral knowledge is deeply advantageous.
As the exchange of information is now happening on a more regular basis we are seeing an uptick in queries being filtered through various cross-border competent authorities seeking validation of information submitted in a taxable person’s home jurisdiction. Anecdotally, we are also seeing the Cayman Islands Department of International Tax Cooperation (DITC) issue significant fines in respect of deficiencies in reporting obligations, be that missed, late or incorrect filings. It is important that clients seek appropriately provisioned service providers to help them meet these complex requirements.
Ruddick: Administrators servicing Cayman-domiciled funds are increasingly required to navigate a multi-layered compliance landscape. FATCA and CRS obligations are now business as usual, but their complexity — particularly for global investor bases — requires robust systems and constant updates.
Cross-border reporting, Alternative Investment Fund Managers Directive (AIFMD)-compliance for EU-marketed funds, and SEC-related obligations for US-focused funds add to the operational burden. The trend is clear — administrators must now operate within a global compliance framework, not just a local one.
There is growing pressure to implement automated compliance monitoring and data validation tools — both to improve accuracy and to satisfy investor due diligence. Cybersecurity is another critical area, with administrators facing increased expectations around safeguarding sensitive investor and net asset value (NAV) data.
Administrators are also collaborating more closely with independent directors, especially as investor demands around transparency and governance continue to rise. These relationships are integral to ensuring that compliance obligations are met without impeding fund performance or investor service.
Variava: Fund administrators managing Cayman-domiciled funds operate within a complicated regulatory framework that necessitates careful navigation of cross-border reporting requirements and multi-jurisdictional compliance systems.
They must ensure that funds adhere to strict reporting obligations under FATCA and CRS, which involve the collection and exchange of investor tax information with relevant tax authorities globally. This entails comprehensive investor due diligence programmes, dependable beneficial ownership data management, and robust data security measures to uphold confidentiality while meeting transparency requirements.
The variety of investor domiciles significantly heightens operational complexity, as administrators frequently need to reconcile varying reporting deadlines, data formats, and compliance standards. Managing this across multiple regulatory frameworks necessitates advanced compliance infrastructure, including integrated IT systems capable of automating data collection, validation, and reporting. Administrators must ensure the timely preparation and submission of reports to CIMA, tax authorities, and other regulators, which requires well-trained personnel skilled in multi-jurisdictional regulatory intricacies.
Beyond tax reporting, administrators are increasingly partnered in CIMA’s risk-based supervisory framework, which, inter-alia, includes adherence to anti-money laundering, counter-financing of terrorism regulations, and economic substance requirements. Maintaining accurate and comprehensive registers — encompassing beneficial ownership, investment activities, and financial accounts — is crucial for regulatory inspections and ongoing audits. CIMA’s supervisory approach involves periodic onsite visits and offsite reviews, necessitating that administrators have strong internal controls and escalation protocols.
Given the rising demand for tokenised funds, ESG disclosures, and the changing landscape of cyber risk assessments, administrators are required to integrate new compliance frameworks associated with sustainable finance and digital asset management. This necessitates continuous training, investment in technology, and close cooperation with legal and audit experts to ensure that governance frameworks are both current and resilient. As a result, fund administrators are not just back office operators but essential partners in governance, compliance, and risk management.
Pierre: First and foremost, there is a significant lack of understanding from both the financial institutions (FIs) and the investors/account holders in the respective funds. This lack of clarity spans all jurisdictions and is not confined to any single location.
Another pressing issue is data quality and ongoing remediations. The requirements can sometimes change on short notice, which has a substantial impact on the administrators. For instance, updating a self-certification to modify a percentage on a controlling person might appear straightforward, but it entails considerable time spent examining investors and reaching out to obtain updated documentation. Moreover, it is challenging and costly to find comprehensive systems that can manage all aspects efficiently. Each jurisdiction involved in FATCA and CRS has slightly different requirements, whether it’s the way XML is generated, the portal is used, etc., making it difficult to standardise processes.
The process for offboarding funds is another area of concern. For FATCA and CRS, this process depends on when the fund officially dissolves and receives its certificate of dissolution, which typically occurs well after the last NAV is struck, creating a backlog of pending dissolutions. Adding jurisdictions to the reporting list also introduces risks. When a new location is added, all self-certifications received by an investor there prior to the addition must be updated, as the classification changes.
Additionally, changes to reporting or regulations require administrators to constantly update their procedures to align with new requirements from all jurisdictions. While some provide easily accessible manuals and FAQs, others do not. Furthermore, there are jurisdictions where documentation is not published in English, complicating the understanding of these changes. When administrators use third-party systems, they must rely on vendors to be prompt in updating for any new regulations. Unfortunately, most systems lack a comprehensive end-to-end process, necessitating manual intervention or the use of custom IT solutions.
Lastly, we are seeing an increase in the number of investors and account holders with very complex structures entering funds. This often necessitates seeking external advice, which adds to the overall costs.
How are ESG considerations and sustainable finance trends influencing fund domiciliation decisions, and is the Cayman Islands adapting its regulatory framework to accommodate these evolving investor demands?
Pierre: The evolution of ESG in the Cayman Islands has been a conservative yet steady journey building on the supervisory issues and information circular issued by CIMA in December 2021. As of now, there are no specific reporting and disclosure regulations tailored to ESG. The Cayman Islands continue to keep a watchful eye on international best practices, carefully measuring their responses to global trends.
The approach taken has not been one of strict regulations on financial industry vehicles. Instead, the Cayman Islands have maintained a deliberate flexibility, acknowledging their unique position as the world’s leading domicile for investment funds and capital markets across a broad spectrum of financial services products. Notably, there has been an uptick in new fund launches with an ESG focus, as well as an increase in green bonds within the fixed income market. Asset managers, possibly spurred by investor activism, have been integrating ESG into their investment objectives. Industry experts in the Cayman Islands are well-prepared to adapt to this growing trend, maintaining a close watch on global best practices, and actively engaging in dialogue with the Cayman Islands Government through industry peer groups and direct engagement.
Ruddick: ESG is no longer a niche consideration — it is becoming a standard part of allocator due diligence, particularly for managers targeting European or North American investors. While Cayman does not currently have a formal ESG regulatory regime, the jurisdiction remains highly accommodating to ESG-aligned strategies.
In practice, ESG integration tends to happen at the investment manager level, rather than at the investment fund domicile. Cayman’s flexible structure enables managers to implement whatever ESG policy framework best fits their strategy, whether Sustainable Finance Disclosure Regulation (SFDR)-aligned or bespoke.
That said, there is an opportunity for Cayman to develop ESG certification tools or disclosure templates that support managers seeking to enhance transparency and comparability. Other jurisdictions, such as Luxembourg and Ireland, are positioning themselves more aggressively on the ESG front — so Cayman will need to ensure it keeps pace with evolving investor expectations.
We are also seeing shifts in fee structures and liquidity terms, driven by investor sensitivity and demand for alignment. The ‘2 and 20’ model is increasingly rare, with most managers offering lower management fees, and flexible redemption terms — including gates and lock-ups — designed to ensure stability while accommodating responsible ESG-oriented capital.
Widmer: Fund sponsors are using Cayman vehicles to structure a wide range of ESG-aligned funds, including impact funds, green infrastructure and social capital strategies. The flexibility of the Cayman regime allows these investment goals to be embedded in fund offering documents, governance arrangements and performance metrics, without the need for prescriptive legislative mandates.
While there is no dedicated ESG regulatory framework in Cayman, local service providers, including legal counsel and fund administrators, are increasingly supporting clients with ESG disclosures, investor communications, and third-party assurance processes. Cayman’s regulatory authorities are also monitoring international developments to maintain compatibility with evolving global standards such as the International Sustainability Standards Board (ISSB) and Sustainability Accounting Standards Board (SASB).
In this way, Cayman is ensuring it remains a viable and attractive domicile for ESG and sustainable finance vehicles, without undermining its core value proposition of flexibility and efficiency.
Gallagher: The Cayman Islands has been strong in promoting ESG at all levels and we have seen a number of initiatives in this space.
This includes a government commitment to the UN Sustainable Development Goals (SDGs) initiative; guidance from the CIMA on ESG-related disclosures for regulated funds; the Cayman Islands stock exchange’s platform for listing sustainable investment products, and its introduction of a green bonds segment in 2019; the Cayman Islands Fund Administrators Association (CIFAA) ESG committee; and right down to local endeavors by residents to promote local conservation initiatives.
The reality is, even though the structures have been put in place to facilitate growth in ESG and sustainable finance structures, there are also other factors that will influence investor demand such as political and economic pressures which will always feature heavily. Europe has long been dominant in this space but as the market continues to grow and mature in the coming years, the Cayman Islands should see more inflows from US-based investors.
What role does the quality and depth of the local service provider ecosystem — including administrators, auditors and legal counsel — play in maintaining the Cayman Islands’ competitiveness as a funds hub?
Bouck: The Cayman Islands’ financial ecosystem’s decades of successful operating history and experience have given it a high caliber of service providers. The extensive and sophisticated ecosystem of service providers in the Cayman Islands is a vital foundation that supports the jurisdiction’s reputation as a leading global funds domicile.
The local service provider ecosystem generally consists of administrators, auditors, legal advisors, custodians, fund managers, and compliance experts — who work together seamlessly to provide high-quality, comprehensive services that are crucial for the establishment, operation, and regulatory compliance of funds.
The depth of knowledge in this sector reflects the jurisdiction’s long-standing financial services industry, allowing providers to efficiently handle complex transactions, adapt to changing regulatory requirements, and meet diverse investor needs.
This ecosystem fosters innovation by quickly interpreting regulatory changes and converting them into practical advice and operational frameworks, thereby reducing time-to-market and minimising risk exposures for fund clients.
The presence of many skilled international and local firms promotes healthy competition, enhances quality standards, and encourages specialisation in emerging areas such as digital assets, ESG, and fintech-enabled fund services.
Moreover, ongoing professional development and regulatory engagement ensure that the local industry stays aligned with global best practices and compliance expectations.
CIMA regularly engages with these industry participants through industry association meetings to discuss and guide on emerging trends and regulatory needs. These collaborative forums promote open communication and a proactive approach to regulatory changes or market developments.
CIMA also hosts outreach events to raise awareness of common challenges, identify regulatory gaps, and share key observations. These events serve to educate industry participants on CIMA’s regulatory expectations for investment funds.
Crucially, this mature ecosystem also enhances the Cayman Islands’ reputation as a jurisdiction with a strong governance culture capable of supporting complex and innovative fund structures.
The expertise of service providers often serves as a key differentiator for investors when assessing alternative domiciles, providing a lasting competitive edge for the Cayman Islands.
Gallagher: The success of the Cayman Islands as a global leader in the funds industry is in no small part due to the effectiveness of the local service provider ecosystem. Cayman’s service providers offer deep levels of expertise in fund structures, regulations, operations, and the ability to work hand-in-hand with onshore advisors to create best in class products to global investors.
Cayman has also benefitted from the establishment of various industry associations who are able to work effectively with Government, Regulators and the Judiciary to ensure Cayman maintains its position as the leading fund domicile.
Pierre: Service providers are integral to maintaining the Cayman Islands’ place at the top of the podium for competitiveness as a funds hub. Professional services providers extend beyond administrators, legal and public accounting to other fiduciary services and are further supported and governed by the local regulator, government, and bodies such as Cayman Finance.
Collectively they work together to maintain the integrity of the jurisdiction by advising on, reviewing, and consistently delivering world-class services that adhere to international regulatory standards. Partnering with local experts gives businesses peace of mind and places the focus on growth, while ensuring that funds remain compliant with global regulations.
Ruddick: It plays a foundational role. Cayman’s ‘critical mass’ of Tier 1 service providers is central to its long-term competitiveness. Clients benefit from direct access to experienced professionals across all functions — legal, audit, governance, fund admin, IT, and cybersecurity — often under one roof or within one time zone.
This depth of expertise ensures Cayman can support everything from emerging managers launching their first fund to global institutional players managing multi-strategy platforms.
The jurisdiction’s alignment with North and South American time zones also gives it an edge over many European domiciles, particularly in servicing US-based managers and investors.
Of course, talent retention and development are critical to sustaining this advantage. Investment in training, technology and succession planning — particularly in fund administration and compliance functions — will be essential to ensuring the ecosystem remains agile and future-ready.
Widmer: The depth and professionalism of the Cayman Islands’ service provider ecosystem are fundamental to its continued competitiveness as a global funds hub.
The jurisdiction features a large experienced community of administrators, auditors, law firms and corporate services providers, many of whom have long-standing relationships with the world’s leading fund sponsors and institutional investors.
As of 2025, there are 69 CIMA-licensed mutual fund administrators in the jurisdiction, all of the big four audit firms have a strong presence in Cayman, and the legal community includes internationally recognised firms with deep expertise in fund structuring, regulatory compliance and dispute resolution.
This ecosystem not only supports the efficient formation and ongoing operation of investment funds, but also plays a key role in ensuring the jurisdiction remains responsive to global developments.
Whether it is implementing regulatory updates, adapting to new asset classes, or advising on cross-border tax and disclosure regimes, local service providers are key to maintaining the trust and confidence of clients.
Their professionalism, institutional knowledge and close working relationship with CIMA ensure that the jurisdiction continues to offer the highest standards of investor protection, while preserving the commercial pragmatism that has made it such a popular choice for fund domiciliation.
Looking ahead, what do you see as the most significant opportunities and threats facing the Cayman Islands as a Financial Centre in general and a funds domicile in particular — particularly in light of changing geopolitical dynamics, regulatory harmonisation efforts, and emerging digital asset fund structures?
Widmer: The Cayman Islands is well-positioned to capitalise on several strategic opportunities while remaining mindful of the challenges that lie ahead.
On the opportunity side, the jurisdiction is poised to benefit from increased fund flows from emerging markets such as Brazil, the UAE, India and China, alongside growth markets such as Japan, where investors are seeking stable, internationally recognised structures to support portfolio diversification and long-term growth.
There is also growing interest in digital asset strategies and fund tokenisation, and Cayman’s flexible regulatory approach and openness to innovation give it an edge in accommodating these evolving structures. The jurisdiction is already home to most of the world’s crypto-related funds, and further regulatory developments may position it as a global hub for blockchain-enabled finance.
Cayman also stands to benefit from global economic uncertainty by offering a stable, neutral platform for capital aggregation and international investment.
However, there are threats to navigate. Rising compliance costs and regulatory complexity have raised the bar for smaller managers. The competition for skilled professionals, both in Cayman and globally, poses a challenge to maintaining service quality and a capacity for innovation.
To remain competitive, the jurisdiction must continue to invest in talent, technology and forward-thinking regulation, while maintaining its commitment to international standards. With these elements in place, the Cayman Islands is well equipped to remain a premier financial centre and the domicile of choice for the next generation of global investment funds.
Gallagher: The impact of technology advances and the rise of digital assets will bring huge opportunities for the growth and development of the Cayman Islands, but equally it will inherently expose the jurisdiction to very harmful threats if not addressed appropriately. For over a decade, the Cayman Islands has been introducing legislation and regulations to support, nurture and develop a thriving environment for the digital economy. For example, the foundation company, introduced in 2017, has been a versatile vehicle for technology entrepreneurs involved in blockchain, crypto and web3. This has seen a growth in the numbers of founders relocating to the Cayman Islands for work/life reasons.
The Cayman Islands has seen the introduction of virtual asset service provider (VASP) regulations to enhance protections in the digital space. From a funds domicile perspective, tokenised funds is something on the horizon and the Cayman Islands is well positioned to become a hub for these funds, should the appropriate infrastructure be put in place — and there is no reason why that cannot be the case with the right planning.
From a threat perspective, globally there is the ongoing fight against cybercrime and all stakeholders can play their part in defending against bad-actors.
The regulator here has played a part in rolling out strong cybersecurity regulation and service providers are investing heavily in various cyber-defense initiatives, ranging from staff training to implementation of new technologies to stay ahead of the game.
Geopolitically, Cayman is a small open economy but with extensive connections to other major financial centers; historical ties to the UK, close proximity to the US and a recently established Asia office based in Singapore all facilitate the growth of the funds sector of the Cayman Islands economy.
Globally, we all see a rise in the numbers of sanctions issued by competent authorities on various individuals, so from a jurisdictional perspective stakeholders need to ensure that a robust, fit-for-purpose framework is in place to detect and prevent financial crimes in all shapes and forms. The Cayman Islands was recognized for its leadership in the fight against financial crime by the FATF when it was appointed as one of the first two guest members under FATF’s Regional Bodies’ Guest Initiative to participate in FATF meetings and working groups during 2024/25, enhancing global financial security perspectives.
Ruddick: Cayman’s future will be shaped by its ability to stay ahead of innovation, while remaining compliant with evolving global standards.
Opportunities lie in the continued growth of digital asset funds — including tokenised securities and crypto investment vehicles — and in the use of blockchain for fund recordkeeping, digital identity, and NAV calculations.
Cayman is also well-positioned to serve as a ‘regulatory sandbox’ for fintechs and emerging managers looking to launch novel strategies in a flexible yet credible jurisdiction.
On the risk side, geopolitical shifts — such as US-China tensions, grey/blacklisting threats, or new EU frameworks — present real challenges.
Regulatory duplication, particularly from onshore jurisdictions aiming to push fund managers back into their domestic systems, could also create friction. However, Cayman’s commitment to governance, transparency, and institutional professionalism is its key advantage.
Proactive engagement with global regulators, harmonising compliance tools where appropriate, and maintaining flexibility in fund structuring will be critical. If Cayman gets this balance right, it can continue to lead not just by history and infrastructure, but by vision and innovation.
Pierre: Change can either be viewed as an obstacle or an opportunity. Investing in technology and development, such as introducing tech in fund management with the steady rise and acceptance of digital assets, is a significant opportunity for Cayman to stay ahead of other competing regions.
Service providers and regulators alike need to harmonise efforts to design flexible structures that embrace and meet the ever-changing needs of the market.
As previously mentioned, Cayman has been addressing the stigma of having lower AML standards that create difficulties for the financial services sector.
The dedication and hard work by its professional infrastructure continue to chip away at this ongoing pressure to implement international regulatory standards and correct reputational challenges around transparency, which historically may have been a deterrent to some investors.
Majid: Looking forward, the Cayman Islands is well-positioned to capitalise on emerging opportunities while managing significant risks in a swiftly evolving global financial environment.
There are numerous prospects in digital asset fund structuring, where Cayman’s proactive regulatory adoption of VASP frameworks enables it to meet the growing demand for regulated cryptocurrency and tokenised investment options.
Progress in regulatory technology and supervisory digitisation could further improve operational efficiencies and ensure timely compliance within the fund industry, thereby enhancing Cayman’s market appeal.
On the other hand, the Cayman Islands financial services industry faces several challenges. The increasing convergence of international regulations raises compliance costs and the risk of over-regulation, which could jeopardise market competitiveness if agility is compromised.
Geopolitical tensions, potential tax reforms — including global minimum tax initiatives — and multinational tax transparency efforts may impact Cayman’s tax neutrality attractiveness. Additionally, reputational risks arising from misuse or anti-money laundering breaches necessitate ongoing vigilance.
The rapid pace of technological advancements, shifting global regulations, cybersecurity risks, consumer protection concerns, and an increasing focus on sustainability are some additional challenges.
At CIMA, we view challenges as opportunities for improvement, and this approach is reflected in our Strategic Plan, which outlines key priorities for the 2024-2026 period.
CIMA’s current strategic objectives focus on six core areas: enhancing technological capabilities, strengthening efforts to combat financial crime, establishing proactive and effective regulation, being recognised as an employer of choice, maintaining the integrIty of Cayman’s currency, and expanding public outreach and education.
These priorities will ensure that the Cayman Islands remain competitive, well-regulated, and well-positioned for the future.
CIMA is actively addressing these challenges and pursuing these opportunities to enhance its regulatory framework and supervisory processes in collaboration with relevant stakeholders.
CIMA is confident that by embracing innovation, strengthening regulatory frameworks, and prioritising sustainability, the Cayman Islands can continue to lead as a global financial center.
In conclusion, the strength of the Cayman Islands is rooted in its capacity to foresee, adjust, and create within a clear yet adaptable regulatory environment, bolstered by a strong and knowledgeable professional network, which allows it to uphold its status as a leading global funds domicile.
Pranav Variava, Head, Investments Supervision Division, CIMA
Christopher Bouck, Deputy Head, Investments Supervision Division, CIMA
Michelle Majid, Deputy Head, Financial Stability & Macroprudential Monitoring, CIMA
Niall Gallagher, Managing Director, Citco Trustees (Cayman)
Geoff Ruddick, Managing Director and Country Head, Cayman Islands, Hawksford
Kendell Pierre, Chief Compliance Officer, MUFG Investor Services
How has the Cayman Islands’ position as a leading funds domicile evolved in recent years, and what key trends are you observing in terms of fund formations and asset flows compared to competing jurisdictions?
Geoff Ruddick: The Cayman Islands has shown remarkable resilience and adaptability in the face of global market uncertainty, particularly post-pandemic. While other jurisdictions have faced headwinds, Cayman has rebounded strongly, reaffirming its position as the preferred domicile for fund managers and investors from around the world. As of 31 December 2024, there were 12,858 funds registered under the Mutual Funds Act in Cayman — a testament to the continued strength of its offering. We have seen particular growth in private credit, private equity, and digital asset strategies — including crypto funds and tokenised investment structures. Segregated Portfolio Companies (SPCs) continue to gain traction due to their flexibility. The industry continues to diversify, with long-short and long-only equity strategies remaining dominant, while macro, multi-strategy, and fund of funds structures are maintaining significant market share.
Interestingly, there is a shift away from the traditional ‘classic’ master-feeder model, particularly among Asian and European managers, towards more cost-efficient single and double-legged structures. Cayman exempted companies and stand-alone funds remain a popular vehicle of choice, largely due to their versatility and efficiency.
Compared to many competing jurisdictions, Cayman remains highly competitive on speed-to-market and operational flexibility. While institutional strategies may sometimes lean toward these other centres for specific regulatory or investor-driven reasons, Cayman’s infrastructure, regulatory landscape together with the fact that investors are familiar with it, continues to position the jurisdiction ahead of the curve.
Niall Gallagher: The Cayman Islands has been unwavering in its commitment to the financial services industry and it is the cornerstone of the economic success of the jurisdiction over many years. Successive governments have championed the Cayman Islands in this regard and have put in place policies that have allowed the funds industry to thrive whilst at the same time keeping a keen eye on ensuring that the appropriate regulation and legislation are in place to protect all stakeholders.
While many fund domiciles are growing and strengthening, the Cayman Islands is still very much leading the way when it comes to hedge and private equity (PE) funds.
Indeed, the popularity of Cayman from a PE perspective is clearly borne out by the figures; since the introduction of the Private Funds Act, 2020, the Cayman Islands has seen the registration of over 17,500 private funds.
From an asset flow perspective, we are seeing continuous strong demand from family offices and high-net-worth investors, particularly in the private asset space. Indeed, overall, the increasing sophistication of the family office sector is driving demand for a wide range of services as these investors seek institutional expertise to support their growth strategies.
Samantha Widmer: The Cayman Islands has strengthened its position as the world’s premier offshore funds domicile in an increasingly complex global macroeconomic and regulatory environment. Over the past few years, Cayman has experienced sustained growth in fund registrations by being responsive to evolving market needs and offering sophisticated, flexible structures to managers and investors worldwide.
As of 30 June 2025, the Cayman Islands Monetary Authority reported 30,699 registered Cayman funds. They included 13,090 mutual funds, which are mostly hedge funds, and 17,609 private funds.
Since 2020, private fund registrations have increased by 38.7 per cent, and mutual fund registrations by approximately 10 per cent. This growth outpaces most competing jurisdictions and underpins the Cayman’s continued dominance as a domicile for hedge funds and private equity funds.
The US Securities and Exchange Commission’s (SEC’s) private funds statistics show that the Cayman Islands accounts for almost a third (31.6 per cent) of the net assets of US private funds included in the data, and for more than half (53.6 per cent) of all qualifying hedge funds’ net assets reported to the SEC.
As a fund domicile, Cayman offers a range of benefits. The tax-neutral regime, which avoids double taxation, a trusted legal infrastructure based on English common law, efficient and internationally recognised regulation, and a large pool of professional service providers. As such, the jurisdiction continues to be a preferred destination for US, Asian, European and increasingly Middle Eastern fund sponsors.
Kendell Pierre: It is evident that Cayman remains the premier jurisdiction for fund domicile. This remarkable achievement is a testament to the collective hard work, dedication, and the strategic decisions of the entire financial services industry made along the way. The total number of funds registered with the Cayman Islands Monetary Authority (CIMA) is at an all-time high.This incredible achievement is partly fueled by a surge in private equity activity, with 2024 marking the highest number of private funds registered since the introduction of the Private Funds Act in 2020.
Flexible legislation, political and economic stability, and the quality and depth of the local service providers have provided the foundation for this continued growth and is the ideal platform for any future developments.
Pranav Variava: The Cayman Islands has long been established as a premier jurisdiction for the domiciliation of alternative investment funds, especially private equity and hedge funds. This stance has been strengthened over the last few years by steady increases in asset flows and fund registrations, supported by a flexible legal framework, advanced regulatory monitoring, and the jurisdiction’s well recognised tax neutrality. With more than 30,000 alternative investment funds established and managing a combined net asset value of over US$8 trillion, 2024 saw a record high in fund formations.
As the jurisdiction continues to draw a wide range of international fund and institutional investors, its quantitative growth reflects the qualitative strength.
Looking ahead, CIMA is committed to addressing emerging trends in the financial sector. Beyond regulating traditional financial services, the authority has prioritised digital transformation, fintech innovation, and sustainable finance initiatives, further cementing its position as a forward-thinking leader in the global financial industry.
Strong growth in private funds and modest but consistent growth in traditional mutual funds are two major trends influencing fund formations. Notably, Cayman private funds have grown by around 5 per cent annually, indicating trust in Cayman’s operational infrastructure and regulatory framework. With a growing demand for funds built on digital assets and ESG-related investments, the fund sector has also become more diversified.
CIMA has observed an increasing interest in fintech and blockchain assets, particularly in tokenised funds. To date, three applications for tokenised funds have been approved, and we are continuing to receive heightened interest in this category of funds. Additionally, CIMA is collaborating with the government to establish a specific regulatory framework for tokenised funds.
What impact have recent regulatory developments — including the Private Funds Act, beneficial ownership requirements, and economic substance regulations — had on fund establishment costs, operational complexity, and client decision-making processes?
Christopher Bouck: The recent regulatory developments, notably the Private Funds Act, enhanced beneficial ownership regimes, and economic substance regulations, have significantly influenced the cost structures and operational complexities associated with the establishment and administration of funds in the Cayman Islands. However, these developments are a step in the right direction which further aligns Cayman Islands’ regulatory framework with global best practices of and recommendations of supranational stakeholders such as the Organisation for Economic Co-operation and Development (OECD), European Union (EU), and the Financial Action Task Force (FATF).
The Private Funds Act has established more robust standards for fund governance mandating enhanced disclosures and transparent management of conflicts of interest. Although these regulations may have increased compliance costs, they bolster investor confidence in governance and transparency, a trade-off that many managers consider vital for maintaining market credibility.
The implementation of uniformly mandatory beneficial ownership disclosures, as stipulated by the Beneficial Ownership Transparency Act, has greatly improved the Cayman Islands’ anti-money laundering (AML) and counter-terrorism financing framework. Fund structures are now required to maintain and report accurate and current beneficial ownership information to the Registrar of Companies, while key stakeholders must undergo rigorous fitness and propriety assessments by CIMA.
This regulatory framework adds an extra administrative burden during both the fund launch and ongoing maintenance phases, but it significantly enhances the jurisdiction’s global reputation and its capacity to combat illicit activities.
Economic substance legislation, mandated by international standard-setting organisations such as the OECD and EU, requires certain entities in the Cayman Islands to demonstrate substantial local activity, which incurs costs related to office space, local staffing, and governance controls. Although this initially raised concerns regarding the attractiveness of the Cayman Islands, the jurisdiction provides well-structured guidance and exemptions tailored to specific entity types, thereby balancing compliance requirements with commercial viability. Fund managers and service providers have adapted their operational models to ensure compliance in a cost-effective manner.
While the costs may have increased, CIMA’s ongoing efforts in digitisation and a risk-based supervisory approach are helping to alleviate these concerns in terms of improved turnaround times. From the perspective of an entity’s decision-making, clear and upfront communication regarding these requirements and associated costs is essential for maintaining transparency. Notably, these regulatory advancements highlight the jurisdiction’s commitment to aligning with global standards, thereby minimising the risk of blacklisting and improving access to institutional investors who value stringent governance and compliance.
The Cayman Islands’ continued ability to adapt to international regulatory standards has been crucial for effective supervision and in preserving its reputation as a leading global financial center.
While these measures may have additional compliance costs, they also present significant opportunities. By aligning with global standards, the Cayman Islands enhances its reputation as a well-regulated and compliant jurisdiction, which is attractive to international investors and businesses. As global regulatory expectations tighten, being ahead of the curve in terms of compliance gives the Cayman Islands a competitive edge, particularly in sectors like private equity, hedge funds, and cryptocurrency funds, where investors prioritise the importance of regulatory certainty.
Furthermore, alignment with international standards can attract more sophisticated capital, including institutional investors such as pension funds, sovereign wealth funds, and high-net-worth individuals, who require assurance that their investments are safeguarded from regulatory or reputational risks.
Ruddick: The introduction of new regulations, including the Private Funds Act, has certainly increased baseline operational complexity — but in many ways, it has formalised and standardised what were already widely adopted best practices. For serious market participants, the impact has been manageable, and these changes have enhanced Cayman’s credibility on the global stage.
The beneficial ownership (BO) regime has added an administrative layer, typically handled efficiently via service providers and legal counsel. Similarly, economic substance rules have had a minimal direct impact on the funds themselves, applying more meaningfully to fund managers with local operations. Nonetheless, these developments contribute to a slightly more involved setup process, especially for new entrants or less-experienced managers.
That said, the Cayman ecosystem — legal advisors, administrators, and governance professionals — has adapted quickly. These professionals continue to play a key role in absorbing complexity and helping clients navigate the evolving landscape. As a result, we have not seen a material deterrent to fund establishment in Cayman — rather, these developments have helped reassure investors about Cayman’s regulatory robustness.
Widmer: Recent regulatory developments have introduced greater compliance and oversight requirements for Cayman-domiciled funds. Far from undermining the jurisdiction’s appeal, these changes have strengthened its reputation for sound governance and reinforced its standing among global investors and regulatory bodies.
The introduction of the Private Funds Act marked a significant milestone, aligning the Cayman Islands’ regulatory framework with evolving international standards for transparency and investor protection. Key provisions include mandatory registration with the Cayman Islands Monetary Authority (CIMA), annual audits, and the implementation of independent oversight functions such as valuation, cash monitoring, and safekeeping of fund assets.
These reforms have also supported the jurisdiction’s efforts to meet the recommendations of the FATF, further demonstrating Cayman’s commitment to global best practices in AML and counter-terrorist financing (CTF).
These changes have contributed to the costs of establishing and operating a fund, as managers now face mandatory service provider appointments and more rigorous reporting obligations.
Similarly, the enhanced beneficial ownership framework requires entities to maintain detailed registers. Economic substance rules, while initially aimed at relevant operating entities rather than investment funds, have also introduced additional filings and considerations when structuring vehicles for asset management and holding purposes.
Taken together, these regulatory shifts mean that fund sponsors must now plan for a more structured establishment process. However, there has been no overall negative impact. For many managers and investors, the presence of a robust, transparent regulatory framework is a benefit rather than a drawback.
Cayman’s ability to balance global standards with commercial pragmatism remains a distinguishing factor. It reinforces, rather than undermines, Cayman’s competitiveness.
Gallagher: Regulatory developments are constantly evolving and the industry continues to evolve with it. Investors take comfort that these developments protect their interests while general partners (GPs) have an opportunity to differentiate themselves through operational efficiencies. Increasing regulatory developments have driven cost increases but these are really only marginal, and their implementation has caused minimum disruption.
Changes to the beneficial ownership regime announced in 2023, and the introduction of economic substance requirements, were flagged in advance, and also aligned internationally with other jurisdictions. Therefore, they did not impose any significant challenges.
The Private Funds Act has been a tremendous success; the Act essentially codifies best practice standards across the industry. Operationally, we have seen clients adopting strong governance frameworks which actually benefit the industry and instill confidence in the product.
From a regulatory perspective, CIMA has been providing data to the industry in the form of reports of the findings from their Thematic Reviews which can underscore areas they see as requiring the attention and focus from stakeholders; whilst at the same time being in a position to hold the industry to account through risk-based monitoring of the sector.
How do you assess the Cayman Islands’ competitive advantages against other major domiciles, particularly regarding regulatory flexibility, tax neutrality, and time-to-market for fund launches, and where do you see the most significant challenges?
Gallagher: The Cayman Islands is second to none. The jurisdiction has a no direct taxation policy which has allowed it to flourish as a funds domicile. Caymans fund products provide market participants with certainty, and this in turn means that the time-to-market for fund launches remains extremely competitive, typically less than three months.
Widmer: Cayman’s competitive advantages remain strong, particularly in three key areas: regulatory flexibility, tax neutrality and time-to-market.
The jurisdiction offers a range of fund structures — such as exempted companies, exempted limited partnerships, segregated portfolio companies and unit trusts — that are familiar to international investors and adaptable to a wide variety of strategies and asset classes. This flexibility has made Cayman appealing for managers launching funds across traditional and innovative sectors, including digital assets and ESG-focused investments.
Tax neutrality is a key reason why the Cayman Islands remains attractive to global investors. Since there are no local taxes on income, capital gains, or profits, funds can operate efficiently without adding extra tax layers at the fund level. This is especially useful for complex, cross-border investment structures. Importantly, investors still pay taxes in their home countries — Cayman’s system simply avoids unintended tax complications within the fund itself.
In terms of time-to-market, Cayman is known for its streamlined regulatory process. With the implementation of CIMA’s online REEFS portal, many funds can be registered and launched within a matter of weeks, provided that their service providers are aligned and documentation is in order. This speed, combined with legal certainty and minimal regulatory red tape, is a significant draw for fund managers under pressure to deploy capital efficiently.
That said, the most significant challenges ahead include increased regulation and competition for professional talent. Compliance, including audits, valuations, and cross-border reporting, has become more complex. Meanwhile, competition for talent is another pressing issue, with a growing need to attract and retain skilled professionals to support industry growth.
Pierre: The statistics do not lie and with more than 50 per cent of the world’s funds domiciled in the Cayman Islands, Cayman is clearly the choice for fund entities. I see this in a number of areas:
Regulatory flexibility — with more than three decades of experience servicing the funds industry, the Cayman Islands have grown through innovation and forward-looking policies that embody best practices and have served as a blueprint for others. The Cayman Islands has a mature and well-respected legal and judicial system that’s primarily based on UK common law. Over the years, Cayman’s legal framework has evolved to accommodate various fund structures and investment strategies. The flexibility, strength, and integrity of the AML regime was demonstrated through enhancements of the corporate governance regime. The positive outcome of the FATF inspection and subsequent reporting following improvement measures implemented in the jurisdiction promote stakeholder confidence.
Tax neutrality — the fact that Cayman does not add an extra layer of taxes on transactions taking place there is an attractive factor for fund vehicles. Taxes on the income, capital gains, or dividends of certain Cayman-domiciled entities can be structured so they are not applicable for a period. This does not take away from the significant role that the jurisdiction plays in global efforts to combat tax evasion through legislation, regulation, and automatic tax information sharing arrangements that uphold the highest international standards for transparency and cross-border cooperation under regulations such as the OECD Common Reporting Standard (CRS) and US Foreign Account Tax Compliance Act (FATCA).
Time-to-market — the Cayman Islands is in a favorable time zone, with premier law, accountancy, corporate services, and investments professionals that are employed by some of the world’s leading firms. Their expertise ensures efficient fund administration, compliance, and governance. Under their stewardship, Cayman boasts a robust and quick launch and registration process for investment funds and fund managers facilitating a rapid, yet comprehensive, launch that positions businesses to secure opportunities in a fast-paced market.
The main challenges are perception, cost, and the ever-evolving geopolitical landscape. For years, Cayman has been fighting the stigma of having lower AML standards that create difficulties for the financial services sector. This will be mitigated by the recent FATF endorsement of the AML regime. Cost will always be an issue as inflation rises and companies focus more and more on managing their expenses, however, costs are generally aligned with other offshore jurisdictions. Finally, monitoring requirements for any proposed regulatory changes, assessing the impact, and implementing change in this rapidly changing environment is a challenge that every jurisdiction faces.
Ruddick: Cayman’s core strengths remain as compelling as ever. It offers genuine tax neutrality — a feature that is well understood and valued by institutional investors around the globe — and a flexible, business-friendly regulatory regime. The jurisdiction’s time-to-market advantage is especially notable: new funds can be launched in one to two weeks, whereas competing jurisdictions may require months to achieve the same. The local ecosystem is a key differentiator: Cayman boasts a critical mass of experienced professionals across legal, audit, governance, accounting, and fund administration. Independent governance has become an established best practice — in fact, 70 per cent of new corporate funds in 2024 appointed all or a majority of independent directors. General partner structures are following suit, increasingly introducing independent oversight.
The outsourcing of AML officer roles to independent providers is another hallmark of Cayman’s maturity — especially for institutional or large-scale managers looking for robust oversight without sacrificing efficiency.
That said, there are challenges. The cost of compliance continues to rise, and misperceptions from onshore regulators or the media — particularly around tax or transparency — can distort Cayman’s image. Global regulatory convergence is also creating pressure, as initiatives in the EU, UK, and US aim to harmonise requirements that were once jurisdictionally specific. Cayman must strike the balance between maintaining flexibility and ensuring alignment with international expectations.
Michelle Majid: The primary competitive advantages of the Cayman Islands are its tax-neutral environment, regulatory adaptability, and swift fund launch timelines. The jurisdiction does not impose corporate, income, capital gains, or withholding taxes on funds or investors, which helps to maintain returns and streamline cross-border fund operations. This tax neutrality is a fundamental aspect that is highly regarded by global private capital, particularly in intricate multi-jurisdictional fund structures. Additionally, the regulatory framework is tailored to offer customised structuring options — such as limited partnerships or segregated portfolio companies — with minimal interference, allowing fund managers to execute a variety of investment strategies with flexibility.
Regulatory adaptability is demonstrated by CIMA’s practical approach, particularly under the Private Funds Act and the revised Mutual Funds Act, where requirements are calibrated according to risk and designed to fulfill investors’ due diligence expectations without burdensome bureaucracy. The time required to launch funds is relatively brief. The jurisdiction provides expedited registrations backed by a substantial pool of specialised professionals who are well-versed in CIMA’s procedural intricacies, facilitating a seamless launch experience that promotes rapid capital deployment.
CIMA has effectively struck a balance between regulatory compliance and innovation by implementing policies that promote competitiveness in an ever-changing global market. The Cayman Islands has aligned its regulatory framework with international standards, such as the OECD’s CRS, to reinforce its commitment to tax transparency and maintain credibility on the global stage. While compliance is vital to global competitiveness, the jurisdiction also embraces innovation to address emerging trends such as fintech, blockchain, and ESG investing.
This dynamic approach allows the Cayman Islands to foster the development of new financial products and services without compromising high regulatory standards. Tailored solutions, such as those tailored for tokenised funds, blockchain ventures, and sustainable finance initiatives, showcase this balance, enabling service providers to innovate while ensuring compliance.
Nevertheless, challenges arise in a changing regulatory environment marked by heightened global standard harmonisation, increased scrutiny on AML and substance, and a growing demand from investors for ESG disclosures and impact reporting. Moreover, rising operational costs associated with compliance complexity pose a risk of pricing out smaller fund managers or new entrants to the market. Mitigating reputational risks amid increasing geopolitical scrutiny and tightening global tax policies necessitates ongoing vigilance. It is essential to ensure that the jurisdiction is not merely viewed as a low-tax haven, but rather as a well-regulated and transparent financial center, which is crucial for maintaining investor trust and market access. The capacity to incorporate emerging asset classes, such as digital and tokenised funds, while upholding regulatory clarity will be vital for preserving Cayman’s competitive superiority.
What operational and compliance considerations do fund administrators face when servicing Cayman-domiciled funds, especially regarding cross-border reporting requirements, FATCA/CRS compliance, and managing multiple regulatory frameworks?
Gallagher: Developing appropriate software tools and hiring the right people are the core components to adhering to regulatory obligations in respect of cross-border reporting requirements. The rules and frameworks governing various cross-border reporting regimes carry a high degree of technical competence, particularly when you may also need to consider elements of tax treaties where the rules governing an obligation are silent or opaque. Having appropriate software solutions that can navigate the requirements in conjunction with a talented pool of professionals with sectoral knowledge is deeply advantageous.
As the exchange of information is now happening on a more regular basis we are seeing an uptick in queries being filtered through various cross-border competent authorities seeking validation of information submitted in a taxable person’s home jurisdiction. Anecdotally, we are also seeing the Cayman Islands Department of International Tax Cooperation (DITC) issue significant fines in respect of deficiencies in reporting obligations, be that missed, late or incorrect filings. It is important that clients seek appropriately provisioned service providers to help them meet these complex requirements.
Ruddick: Administrators servicing Cayman-domiciled funds are increasingly required to navigate a multi-layered compliance landscape. FATCA and CRS obligations are now business as usual, but their complexity — particularly for global investor bases — requires robust systems and constant updates.
Cross-border reporting, Alternative Investment Fund Managers Directive (AIFMD)-compliance for EU-marketed funds, and SEC-related obligations for US-focused funds add to the operational burden. The trend is clear — administrators must now operate within a global compliance framework, not just a local one.
There is growing pressure to implement automated compliance monitoring and data validation tools — both to improve accuracy and to satisfy investor due diligence. Cybersecurity is another critical area, with administrators facing increased expectations around safeguarding sensitive investor and net asset value (NAV) data.
Administrators are also collaborating more closely with independent directors, especially as investor demands around transparency and governance continue to rise. These relationships are integral to ensuring that compliance obligations are met without impeding fund performance or investor service.
Variava: Fund administrators managing Cayman-domiciled funds operate within a complicated regulatory framework that necessitates careful navigation of cross-border reporting requirements and multi-jurisdictional compliance systems.
They must ensure that funds adhere to strict reporting obligations under FATCA and CRS, which involve the collection and exchange of investor tax information with relevant tax authorities globally. This entails comprehensive investor due diligence programmes, dependable beneficial ownership data management, and robust data security measures to uphold confidentiality while meeting transparency requirements.
The variety of investor domiciles significantly heightens operational complexity, as administrators frequently need to reconcile varying reporting deadlines, data formats, and compliance standards. Managing this across multiple regulatory frameworks necessitates advanced compliance infrastructure, including integrated IT systems capable of automating data collection, validation, and reporting. Administrators must ensure the timely preparation and submission of reports to CIMA, tax authorities, and other regulators, which requires well-trained personnel skilled in multi-jurisdictional regulatory intricacies.
Beyond tax reporting, administrators are increasingly partnered in CIMA’s risk-based supervisory framework, which, inter-alia, includes adherence to anti-money laundering, counter-financing of terrorism regulations, and economic substance requirements. Maintaining accurate and comprehensive registers — encompassing beneficial ownership, investment activities, and financial accounts — is crucial for regulatory inspections and ongoing audits. CIMA’s supervisory approach involves periodic onsite visits and offsite reviews, necessitating that administrators have strong internal controls and escalation protocols.
Given the rising demand for tokenised funds, ESG disclosures, and the changing landscape of cyber risk assessments, administrators are required to integrate new compliance frameworks associated with sustainable finance and digital asset management. This necessitates continuous training, investment in technology, and close cooperation with legal and audit experts to ensure that governance frameworks are both current and resilient. As a result, fund administrators are not just back office operators but essential partners in governance, compliance, and risk management.
Pierre: First and foremost, there is a significant lack of understanding from both the financial institutions (FIs) and the investors/account holders in the respective funds. This lack of clarity spans all jurisdictions and is not confined to any single location.
Another pressing issue is data quality and ongoing remediations. The requirements can sometimes change on short notice, which has a substantial impact on the administrators. For instance, updating a self-certification to modify a percentage on a controlling person might appear straightforward, but it entails considerable time spent examining investors and reaching out to obtain updated documentation. Moreover, it is challenging and costly to find comprehensive systems that can manage all aspects efficiently. Each jurisdiction involved in FATCA and CRS has slightly different requirements, whether it’s the way XML is generated, the portal is used, etc., making it difficult to standardise processes.
The process for offboarding funds is another area of concern. For FATCA and CRS, this process depends on when the fund officially dissolves and receives its certificate of dissolution, which typically occurs well after the last NAV is struck, creating a backlog of pending dissolutions. Adding jurisdictions to the reporting list also introduces risks. When a new location is added, all self-certifications received by an investor there prior to the addition must be updated, as the classification changes.
Additionally, changes to reporting or regulations require administrators to constantly update their procedures to align with new requirements from all jurisdictions. While some provide easily accessible manuals and FAQs, others do not. Furthermore, there are jurisdictions where documentation is not published in English, complicating the understanding of these changes. When administrators use third-party systems, they must rely on vendors to be prompt in updating for any new regulations. Unfortunately, most systems lack a comprehensive end-to-end process, necessitating manual intervention or the use of custom IT solutions.
Lastly, we are seeing an increase in the number of investors and account holders with very complex structures entering funds. This often necessitates seeking external advice, which adds to the overall costs.
How are ESG considerations and sustainable finance trends influencing fund domiciliation decisions, and is the Cayman Islands adapting its regulatory framework to accommodate these evolving investor demands?
Pierre: The evolution of ESG in the Cayman Islands has been a conservative yet steady journey building on the supervisory issues and information circular issued by CIMA in December 2021. As of now, there are no specific reporting and disclosure regulations tailored to ESG. The Cayman Islands continue to keep a watchful eye on international best practices, carefully measuring their responses to global trends.
The approach taken has not been one of strict regulations on financial industry vehicles. Instead, the Cayman Islands have maintained a deliberate flexibility, acknowledging their unique position as the world’s leading domicile for investment funds and capital markets across a broad spectrum of financial services products. Notably, there has been an uptick in new fund launches with an ESG focus, as well as an increase in green bonds within the fixed income market. Asset managers, possibly spurred by investor activism, have been integrating ESG into their investment objectives. Industry experts in the Cayman Islands are well-prepared to adapt to this growing trend, maintaining a close watch on global best practices, and actively engaging in dialogue with the Cayman Islands Government through industry peer groups and direct engagement.
Ruddick: ESG is no longer a niche consideration — it is becoming a standard part of allocator due diligence, particularly for managers targeting European or North American investors. While Cayman does not currently have a formal ESG regulatory regime, the jurisdiction remains highly accommodating to ESG-aligned strategies.
In practice, ESG integration tends to happen at the investment manager level, rather than at the investment fund domicile. Cayman’s flexible structure enables managers to implement whatever ESG policy framework best fits their strategy, whether Sustainable Finance Disclosure Regulation (SFDR)-aligned or bespoke.
That said, there is an opportunity for Cayman to develop ESG certification tools or disclosure templates that support managers seeking to enhance transparency and comparability. Other jurisdictions, such as Luxembourg and Ireland, are positioning themselves more aggressively on the ESG front — so Cayman will need to ensure it keeps pace with evolving investor expectations.
We are also seeing shifts in fee structures and liquidity terms, driven by investor sensitivity and demand for alignment. The ‘2 and 20’ model is increasingly rare, with most managers offering lower management fees, and flexible redemption terms — including gates and lock-ups — designed to ensure stability while accommodating responsible ESG-oriented capital.
Widmer: Fund sponsors are using Cayman vehicles to structure a wide range of ESG-aligned funds, including impact funds, green infrastructure and social capital strategies. The flexibility of the Cayman regime allows these investment goals to be embedded in fund offering documents, governance arrangements and performance metrics, without the need for prescriptive legislative mandates.
While there is no dedicated ESG regulatory framework in Cayman, local service providers, including legal counsel and fund administrators, are increasingly supporting clients with ESG disclosures, investor communications, and third-party assurance processes. Cayman’s regulatory authorities are also monitoring international developments to maintain compatibility with evolving global standards such as the International Sustainability Standards Board (ISSB) and Sustainability Accounting Standards Board (SASB).
In this way, Cayman is ensuring it remains a viable and attractive domicile for ESG and sustainable finance vehicles, without undermining its core value proposition of flexibility and efficiency.
Gallagher: The Cayman Islands has been strong in promoting ESG at all levels and we have seen a number of initiatives in this space.
This includes a government commitment to the UN Sustainable Development Goals (SDGs) initiative; guidance from the CIMA on ESG-related disclosures for regulated funds; the Cayman Islands stock exchange’s platform for listing sustainable investment products, and its introduction of a green bonds segment in 2019; the Cayman Islands Fund Administrators Association (CIFAA) ESG committee; and right down to local endeavors by residents to promote local conservation initiatives.
The reality is, even though the structures have been put in place to facilitate growth in ESG and sustainable finance structures, there are also other factors that will influence investor demand such as political and economic pressures which will always feature heavily. Europe has long been dominant in this space but as the market continues to grow and mature in the coming years, the Cayman Islands should see more inflows from US-based investors.
What role does the quality and depth of the local service provider ecosystem — including administrators, auditors and legal counsel — play in maintaining the Cayman Islands’ competitiveness as a funds hub?
Bouck: The Cayman Islands’ financial ecosystem’s decades of successful operating history and experience have given it a high caliber of service providers. The extensive and sophisticated ecosystem of service providers in the Cayman Islands is a vital foundation that supports the jurisdiction’s reputation as a leading global funds domicile.
The local service provider ecosystem generally consists of administrators, auditors, legal advisors, custodians, fund managers, and compliance experts — who work together seamlessly to provide high-quality, comprehensive services that are crucial for the establishment, operation, and regulatory compliance of funds.
The depth of knowledge in this sector reflects the jurisdiction’s long-standing financial services industry, allowing providers to efficiently handle complex transactions, adapt to changing regulatory requirements, and meet diverse investor needs.
This ecosystem fosters innovation by quickly interpreting regulatory changes and converting them into practical advice and operational frameworks, thereby reducing time-to-market and minimising risk exposures for fund clients.
The presence of many skilled international and local firms promotes healthy competition, enhances quality standards, and encourages specialisation in emerging areas such as digital assets, ESG, and fintech-enabled fund services.
Moreover, ongoing professional development and regulatory engagement ensure that the local industry stays aligned with global best practices and compliance expectations.
CIMA regularly engages with these industry participants through industry association meetings to discuss and guide on emerging trends and regulatory needs. These collaborative forums promote open communication and a proactive approach to regulatory changes or market developments.
CIMA also hosts outreach events to raise awareness of common challenges, identify regulatory gaps, and share key observations. These events serve to educate industry participants on CIMA’s regulatory expectations for investment funds.
Crucially, this mature ecosystem also enhances the Cayman Islands’ reputation as a jurisdiction with a strong governance culture capable of supporting complex and innovative fund structures.
The expertise of service providers often serves as a key differentiator for investors when assessing alternative domiciles, providing a lasting competitive edge for the Cayman Islands.
Gallagher: The success of the Cayman Islands as a global leader in the funds industry is in no small part due to the effectiveness of the local service provider ecosystem. Cayman’s service providers offer deep levels of expertise in fund structures, regulations, operations, and the ability to work hand-in-hand with onshore advisors to create best in class products to global investors.
Cayman has also benefitted from the establishment of various industry associations who are able to work effectively with Government, Regulators and the Judiciary to ensure Cayman maintains its position as the leading fund domicile.
Pierre: Service providers are integral to maintaining the Cayman Islands’ place at the top of the podium for competitiveness as a funds hub. Professional services providers extend beyond administrators, legal and public accounting to other fiduciary services and are further supported and governed by the local regulator, government, and bodies such as Cayman Finance.
Collectively they work together to maintain the integrity of the jurisdiction by advising on, reviewing, and consistently delivering world-class services that adhere to international regulatory standards. Partnering with local experts gives businesses peace of mind and places the focus on growth, while ensuring that funds remain compliant with global regulations.
Ruddick: It plays a foundational role. Cayman’s ‘critical mass’ of Tier 1 service providers is central to its long-term competitiveness. Clients benefit from direct access to experienced professionals across all functions — legal, audit, governance, fund admin, IT, and cybersecurity — often under one roof or within one time zone.
This depth of expertise ensures Cayman can support everything from emerging managers launching their first fund to global institutional players managing multi-strategy platforms.
The jurisdiction’s alignment with North and South American time zones also gives it an edge over many European domiciles, particularly in servicing US-based managers and investors.
Of course, talent retention and development are critical to sustaining this advantage. Investment in training, technology and succession planning — particularly in fund administration and compliance functions — will be essential to ensuring the ecosystem remains agile and future-ready.
Widmer: The depth and professionalism of the Cayman Islands’ service provider ecosystem are fundamental to its continued competitiveness as a global funds hub.
The jurisdiction features a large experienced community of administrators, auditors, law firms and corporate services providers, many of whom have long-standing relationships with the world’s leading fund sponsors and institutional investors.
As of 2025, there are 69 CIMA-licensed mutual fund administrators in the jurisdiction, all of the big four audit firms have a strong presence in Cayman, and the legal community includes internationally recognised firms with deep expertise in fund structuring, regulatory compliance and dispute resolution.
This ecosystem not only supports the efficient formation and ongoing operation of investment funds, but also plays a key role in ensuring the jurisdiction remains responsive to global developments.
Whether it is implementing regulatory updates, adapting to new asset classes, or advising on cross-border tax and disclosure regimes, local service providers are key to maintaining the trust and confidence of clients.
Their professionalism, institutional knowledge and close working relationship with CIMA ensure that the jurisdiction continues to offer the highest standards of investor protection, while preserving the commercial pragmatism that has made it such a popular choice for fund domiciliation.
Looking ahead, what do you see as the most significant opportunities and threats facing the Cayman Islands as a Financial Centre in general and a funds domicile in particular — particularly in light of changing geopolitical dynamics, regulatory harmonisation efforts, and emerging digital asset fund structures?
Widmer: The Cayman Islands is well-positioned to capitalise on several strategic opportunities while remaining mindful of the challenges that lie ahead.
On the opportunity side, the jurisdiction is poised to benefit from increased fund flows from emerging markets such as Brazil, the UAE, India and China, alongside growth markets such as Japan, where investors are seeking stable, internationally recognised structures to support portfolio diversification and long-term growth.
There is also growing interest in digital asset strategies and fund tokenisation, and Cayman’s flexible regulatory approach and openness to innovation give it an edge in accommodating these evolving structures. The jurisdiction is already home to most of the world’s crypto-related funds, and further regulatory developments may position it as a global hub for blockchain-enabled finance.
Cayman also stands to benefit from global economic uncertainty by offering a stable, neutral platform for capital aggregation and international investment.
However, there are threats to navigate. Rising compliance costs and regulatory complexity have raised the bar for smaller managers. The competition for skilled professionals, both in Cayman and globally, poses a challenge to maintaining service quality and a capacity for innovation.
To remain competitive, the jurisdiction must continue to invest in talent, technology and forward-thinking regulation, while maintaining its commitment to international standards. With these elements in place, the Cayman Islands is well equipped to remain a premier financial centre and the domicile of choice for the next generation of global investment funds.
Gallagher: The impact of technology advances and the rise of digital assets will bring huge opportunities for the growth and development of the Cayman Islands, but equally it will inherently expose the jurisdiction to very harmful threats if not addressed appropriately. For over a decade, the Cayman Islands has been introducing legislation and regulations to support, nurture and develop a thriving environment for the digital economy. For example, the foundation company, introduced in 2017, has been a versatile vehicle for technology entrepreneurs involved in blockchain, crypto and web3. This has seen a growth in the numbers of founders relocating to the Cayman Islands for work/life reasons.
The Cayman Islands has seen the introduction of virtual asset service provider (VASP) regulations to enhance protections in the digital space. From a funds domicile perspective, tokenised funds is something on the horizon and the Cayman Islands is well positioned to become a hub for these funds, should the appropriate infrastructure be put in place — and there is no reason why that cannot be the case with the right planning.
From a threat perspective, globally there is the ongoing fight against cybercrime and all stakeholders can play their part in defending against bad-actors.
The regulator here has played a part in rolling out strong cybersecurity regulation and service providers are investing heavily in various cyber-defense initiatives, ranging from staff training to implementation of new technologies to stay ahead of the game.
Geopolitically, Cayman is a small open economy but with extensive connections to other major financial centers; historical ties to the UK, close proximity to the US and a recently established Asia office based in Singapore all facilitate the growth of the funds sector of the Cayman Islands economy.
Globally, we all see a rise in the numbers of sanctions issued by competent authorities on various individuals, so from a jurisdictional perspective stakeholders need to ensure that a robust, fit-for-purpose framework is in place to detect and prevent financial crimes in all shapes and forms. The Cayman Islands was recognized for its leadership in the fight against financial crime by the FATF when it was appointed as one of the first two guest members under FATF’s Regional Bodies’ Guest Initiative to participate in FATF meetings and working groups during 2024/25, enhancing global financial security perspectives.
Ruddick: Cayman’s future will be shaped by its ability to stay ahead of innovation, while remaining compliant with evolving global standards.
Opportunities lie in the continued growth of digital asset funds — including tokenised securities and crypto investment vehicles — and in the use of blockchain for fund recordkeeping, digital identity, and NAV calculations.
Cayman is also well-positioned to serve as a ‘regulatory sandbox’ for fintechs and emerging managers looking to launch novel strategies in a flexible yet credible jurisdiction.
On the risk side, geopolitical shifts — such as US-China tensions, grey/blacklisting threats, or new EU frameworks — present real challenges.
Regulatory duplication, particularly from onshore jurisdictions aiming to push fund managers back into their domestic systems, could also create friction. However, Cayman’s commitment to governance, transparency, and institutional professionalism is its key advantage.
Proactive engagement with global regulators, harmonising compliance tools where appropriate, and maintaining flexibility in fund structuring will be critical. If Cayman gets this balance right, it can continue to lead not just by history and infrastructure, but by vision and innovation.
Pierre: Change can either be viewed as an obstacle or an opportunity. Investing in technology and development, such as introducing tech in fund management with the steady rise and acceptance of digital assets, is a significant opportunity for Cayman to stay ahead of other competing regions.
Service providers and regulators alike need to harmonise efforts to design flexible structures that embrace and meet the ever-changing needs of the market.
As previously mentioned, Cayman has been addressing the stigma of having lower AML standards that create difficulties for the financial services sector.
The dedication and hard work by its professional infrastructure continue to chip away at this ongoing pressure to implement international regulatory standards and correct reputational challenges around transparency, which historically may have been a deterrent to some investors.
Majid: Looking forward, the Cayman Islands is well-positioned to capitalise on emerging opportunities while managing significant risks in a swiftly evolving global financial environment.
There are numerous prospects in digital asset fund structuring, where Cayman’s proactive regulatory adoption of VASP frameworks enables it to meet the growing demand for regulated cryptocurrency and tokenised investment options.
Progress in regulatory technology and supervisory digitisation could further improve operational efficiencies and ensure timely compliance within the fund industry, thereby enhancing Cayman’s market appeal.
On the other hand, the Cayman Islands financial services industry faces several challenges. The increasing convergence of international regulations raises compliance costs and the risk of over-regulation, which could jeopardise market competitiveness if agility is compromised.
Geopolitical tensions, potential tax reforms — including global minimum tax initiatives — and multinational tax transparency efforts may impact Cayman’s tax neutrality attractiveness. Additionally, reputational risks arising from misuse or anti-money laundering breaches necessitate ongoing vigilance.
The rapid pace of technological advancements, shifting global regulations, cybersecurity risks, consumer protection concerns, and an increasing focus on sustainability are some additional challenges.
At CIMA, we view challenges as opportunities for improvement, and this approach is reflected in our Strategic Plan, which outlines key priorities for the 2024-2026 period.
CIMA’s current strategic objectives focus on six core areas: enhancing technological capabilities, strengthening efforts to combat financial crime, establishing proactive and effective regulation, being recognised as an employer of choice, maintaining the integrIty of Cayman’s currency, and expanding public outreach and education.
These priorities will ensure that the Cayman Islands remain competitive, well-regulated, and well-positioned for the future.
CIMA is actively addressing these challenges and pursuing these opportunities to enhance its regulatory framework and supervisory processes in collaboration with relevant stakeholders.
CIMA is confident that by embracing innovation, strengthening regulatory frameworks, and prioritising sustainability, the Cayman Islands can continue to lead as a global financial center.
In conclusion, the strength of the Cayman Islands is rooted in its capacity to foresee, adjust, and create within a clear yet adaptable regulatory environment, bolstered by a strong and knowledgeable professional network, which allows it to uphold its status as a leading global funds domicile.
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