The Caribbean Journal is reporting that The Cayman Islands and the United States have signed an agreement that will pave the way for the automatic exchange of tax information under the US’ FATCA law.

According to the online publication, Cayman has signed a Model 1 Intergovernmental Agreement. It stated: that financial institutions in Cayman can directly report information to the Caymanian government on accounts and non-financial entities that are substantially owned by US citizens and residents. “The Caymanian government will then relay that information to the United States’ Internal Revenue service.”

The Journal reported that the two sides also signed a new tax information exchange agreement, replacing the original pact signed in 2001.

Bermuda’s negotiations with the United States over the US FATCA Intergovernmental Agreement (IGA) Model 2 have been completed, but Tax-News.com reported in August that: “The agreement still needs to be endorsed by the United Kingdom’s Foreign and Commonwealth Office in accordance with the July 15, 2010 UK Letter of Entrustment to Bermuda for tax information related matters.

“(Finance Minister) Bob Richards said that he is confident the FCO will move quickly so that Bermuda’s financial institutions are not disadvantaged during the US FATCA registration process.”

A statement quoting US Treasury official Robert Stack praised Bermuda as ‘a leader in global tax transparency.’ “We appreciate Bermuda’s role as a leader in global tax transparency as well as their role serving alongside the US on the Steering Group of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes,” and noted the island had ‘join(ed) our efforts to curtail tax evasion.”

He said the text of the initialled agreement will be made public after it is signed.

Julie Nutter, the US Embassy in London’s Minister-Counselor for Economic Affairs, quoted by Caribbean Journal about the Cayman-US agreement, said: “By working together to detect, deter, and discourage offshore tax abuses through increased transparency and enhanced reporting, we can help build a stronger, more stable, and accountable global financial system.”

“We look forward to collaborating with the Government of the Cayman Islands to further these objectives.”

And the publication also quoted Minister Wayne Wayne Panton, who signed the agreement on behalf of the Cayman Islands, saying the agreement would “implement the standardised data-reporting framework for FATCA.”

“This should help defray administrative costs for financial institutions,” he said.

The Journal reported that the agreement follows a similar pact signed by the Cayman Islands and the United Kingdom earlier this month.