The Cayman Islands has launched a national assessment of its money laundering and terrorist financing risks with a series of workshops organized jointly by the Cayman Anti-Money Laundering Unit and the World Bank this week.
A team from the World Bank visited the Cayman Islands from Oct. 13 to 16 to assist with the national risk assessment by familiarizing representatives from various government entities and statutory authorities with the organization’s methodology and tools.
Under the Financial Action Task Force’s (FATF) 40 Recommendations on International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation issued in 2012, each country is required to carry out an evaluation of the risks it faces in these areas.
Cindy Scotland, managing director of the Cayman Islands Monetary Authority, said the national risk assessment represents the convergence of various international initiatives, to protect the global financial system against money laundering, terrorist financing and financing the proliferation of weapons of mass destruction.
“The outcome of the exercise should not only be to develop solutions to the problems that are associated with such risks but also an assessment of whether we as a country are prepared to assume those identified risks going forward,” she said.
“There is a need for a national strategic plan to determine the direction in which we wish to see the financial services in this jurisdiction develop.
“We also need to be prepared to adjust our model to reflect the level of risk,” Mrs. Scotland added.
As such the assessment was a critical step to ensure the future viability of our Cayman’s financial services industry.
The success of the initiative will be tested by the next Caribbean Financial Action Task Force inspection of Cayman’s anti-money laundering regime, which is expected for early 2017.
In the Cayman Islands, the anti-money laundering enforcement regime is based on a partnership of institutions and authorities including CIMA, the Financial Reporting Authority, the Financial Crime Unit, the police, customs and the attorney general’s chambers. To spearhead the national risk assessment an Anti-Money Laundering Unit was established in the office of the attorney general in March this year and government committed the necessary funding for the initiative in its budget.
Minister for Financial Services Wayne Panton said the risk assessment is an important step to make sure Cayman remains competitive.
“Along with every other country in the world, Cayman is now facing an unprecedented evolution of global initiatives and standards,” he noted. Cayman faces the question whether its response will be comprehensive and effective enough to enhance its reputation and ensure its continued success in a competitive environment.
Premier Alden McLaughlin said he is confident that, following the national risk assessment, the Cayman Islands will remain in the top tier of international jurisdictions but he also observed that, despite Cayman’s best efforts and successes in remaining compliant with international standards, there are international forces that would want to see Cayman fail.
Earlier this year, Cayman found itself on a list of high-risk countries for money laundering published by the Financial Conduct Authority, the U.K.’s financial regulator. The list was later withdrawn after the government criticized the regulator for the arbitrary nature of the list, which included Cayman as the only offshore financial center and no OECD countries.
“We believe one of the reasons Cayman was previously included in the list is that the authority was not aware has been rated equally to the U.K. in the OECD’s 2013 rankings of transparency and global exchange of tax information,” Mr. McLaughlin said. In the Global Forum assessment, the Cayman Islands was rated equally and in many cases better than most EU countries.
Emile van der Does, senior financial specialist with the World Bank, said “the point of this exercise is the action plan that follows from the assessment, how you will address each of the areas identified and in what sequence.”
Following the workshops this week, the different working groups will gather data and draw up an action plan. The World Bank team will return between April and June next year for a final workshop.