‘Onerous standards’ ahead in money laundering review

A long-anticipated review of Cayman’s anti-money laundering and anti-terrorism financing protections is due to occur next month and Attorney General Samuel Bulgin has warned the territory not to expect an easy pass.

“We are fully aware that the upcoming review by the Caribbean Financial Action Task Force is not going to be an easy one,” Mr. Bulgin told Legislative Assembly members Friday. “Indeed, I might make bold to say it is going to be rigorous.

“The standards themselves are onerous. I just want to remind this House that some major countries have undergone this review and have been categorized for enhanced follow-up. Countries such as the U.S., Canada, Belgium and Australia have all gone through this 4th round of evaluation … and were put into enhanced follow-up [meaning they will be given a year to address all issues identified].”

Mr. Bulgin said Cayman would be familiar with periodic reviews done by the task force. In fact, this latest iteration is a follow-up from recommendations the task force made in 2012.

However, the December review will not just focus on what are generally considered “technical” requirements. It will be much broader in nature, including assessments based on the effectiveness of the overall regulatory system.

Also, industries reviewed will not just be limited to the traditional financial services-related firms such as law offices, accountancy firms, banks and trusts. Task force officials were also expected to review real estate companies and precious metals dealers – non-financial services companies – as part of their anti-money laundering/terrorism financing standards protections.

“We have some of the best and brightest professionals … assisting with this preparation and we are confident that we will continue to demonstrate to the world that our financial services industries, our regulatory framework, our legal framework, are among the best in the world,” the attorney general said.

“The continuing good reputation of the financial services sector of these islands is paramount. These islands have been reviewed every which way and we have always managed to demonstrate our adherence to international standards.”

The underlying objective of the upcoming review is to ensure businesses that tend to handle large sums of money can verify, to a reasonable extent, that no cash laundering or terrorism support activities are going on. The task force will also look into proliferation financing, or using the banking system to disguise financing provided for nuclear weapons or material used to make those weapons.

This largely involves “know your client” exercises and other due diligence measures that would be carried out by a bank or financial institution in the regular course of doing business.

Financial Services Ministry Chief Officer Dax Basdeo has said the government does not mean to suggest that other, non-financial services industries do not already have safeguards in place. However, he said, there may be a need for some fine tuning in those industries. Over the past 18 months, those industries have been involved in extensive training exercises in anti-money laundering methods.

Since March, the government Department of Commerce and Investment has been regulating non-financial services-related businesses for the purposes of anti-money laundering requirements. The Cayman Islands Monetary Authority already regulates financial services-related companies.

At present, the non-financial services companies should have written procedures for how they detect and report suspicious transactions, similar to suspicious activity reports filed by local banks. Companies that do not maintain such records may be inspected by the commerce department at random.

1 COMMENT

  1. Meanwhile the easiest country in the world to create a fake company and then get a bank account for that fake company is the USA.

    Our banks insist on director and shareholder information along with passports, references and utility bills. Along with proof of the company address. A business plan. 10 page application and much more.

    None of this is needed in the USA. You can form the company online with a fake address and fake director names. All you need then is a fake driving license in the name of that director and you can open a bank account. In 5 minutes not 2 weeks.

    No annoying questions about the source of funds. Just happy to do business with you.