Read our article in the Cayman Financial Review Magazine, eversion
The government and private sector of the Cayman Islands have demonstrated their commitment to the implementation of regulation which meets and exceeds international standards for transparency and exchange of information.
Since the 1980s they have worked together to create a model regulatory environment. The “know your client” regime, in which service providers are obliged to be familiar with the business operations of their clients, has helped to achieve this goal and has enhanced our reputation as a financial services centre.
Statutory bodies like the Civil Aviation Authority of the Cayman Islands (CAACI) have been pivotal to the development of the Cayman Islands and are an integral part of the robust system of regulation which now exists.
Under the stewardship of PH Richard Smith, the director-general, the primary function of the CAACI is to maintain effective regulatory oversight of all aviation activities within the Cayman Islands and to ensure the safety of air navigation and aircraft in accordance with the standards and recommended practices of the International Civil Aviation Organisation (ICAO) based on the Convention on International Civil Aviation signed in Chicago in 1944 by member states of ICAO.
The remit of the CAACI includes responsibility for the registration of aircraft operating worldwide, the regulation of air traffic services, the certification of operators of aircraft and licensing of air crews, the licensing of air transport services, the certification and licensing of airports, tariff monitoring and the development of policy for airlines and airports. The CAACI is divided into four regulatory divisions to facilitate its oversight of the industry:
- Commercial Affairs, Regulation & Administration Division – whose responsibility includes compliance with international bilateral and multilateral agreements with foreign states for air transport operations, tariff monitoring and the economic regulatory oversight and development of policy for airlines and airports within the Cayman Islands;
- Finance & Compliance Division – whose responsibility includes financial management of the CAACI, application of and compliance with anti-money laundering policies and principles in the client intake and retention process;
- Air Safety Regulation – whose responsibility includes regulatory oversight of all flight operations and airworthiness regimes for all local air operating certificate (AOC) holders and aircraft registered on the Cayman Islands Aircraft Registry, and management of the aircraft registration process in compliance with the highest safety standards; and
- Air Navigation Services Regulation – whose responsibility includes aerodrome and heliport certification, aeronautical information services, aeronautical telecommunication, rescue and firefighting, and meteorological services.
The CAACI is ultimately responsible for and carries out its own due diligence in relation to potential owners of aircraft registered in Cayman in accordance with Cayman’s anti-money laundering policies and principles, and it has taken a very selective approach to the acceptance of aircraft and owners on to the register. The CAACI has carefully balanced its ambition to encourage new business with ensuring the highest levels of regulatory oversight and safety for the aviation sector.
In order for an owner to qualify to register an aircraft on the Cayman Islands Register, it must be an individual or body corporate which is a Commonwealth citizen or incorporated in the Commonwealth, British protected person, Cayman Islands company or resident in the Cayman Islands. The CAACI requires a transparent overview of the owner’s business activities and full disclosure of the beneficial owner is required.
Once all of the due diligence documentation has been submitted, it is usually vetted within two to five business days and the registered owner has been deemed eligible and acceptable to the register, the second phase of the registration process where the aircraft is surveyed and inspected for Airworthiness can begin. An aircraft can be registered usually within four to six weeks; however, the timeline is dependent on the completeness and timing of delivery of all necessary documentation and information to the CAACI.
The social and economic impact of the aviation industry is tremendous. It provides access to gateways to the world encouraging trade and travel to and from the Cayman Islands. This in turn facilitates stay over tourism which increases employment and business for restaurants and shops, making Cayman attractive to both visitors and business investors.
The access to Cayman, which the aviation industry has provided over the last few decades, has directly influenced Cayman’s rise to the upper rankings of international banking league tables and its ability to sustain this growth as a financial services centre.
The CAACI has been extremely responsive to the regulatory needs of the industry. CAACI operates within the limits of the Air Navigation (Overseas Territories) Order 2007 (AN(OT)O), and the Overseas Territories Aviation Requirements (OTARs) which are intended to ensure operational compliance with the standards and recommended practices set out by the ICAO, and has continued to review and update regulations within its sphere of responsibility.
Agreements like the Article 83 bis Agreement which the CAACI has signed with the General Authority of Civil Aviation of Saudi Arabia, demonstrate the CAACI’s commitment to staying on par with the needs of the industry. The agreement stipulates the arrangements between the two regulators for the oversight of aircraft used for scheduled airline services and charters which are registered in Cayman and operated for commercial purposes by Saudi Arabian operator, National Air Services.
Cayman is currently undergoing a period of growth and development in relation to its financial services sector in its quest to stay ahead of its competitors. Pioneering initiatives like the Cayman Islands Special Economic Zone will bring new sectors of business to the Islands and will rely heavily on the ability of the aviation sector to keep up with increased demand. The CAACI will play a crucial role in the success of these initiatives as it has done for the financial services industry over the last few decades.