Government is presenting a raft of bills for debate in the Legislative Assembly on Wednesday, 24 July, to address the fallout from the negative assessment of how Cayman’s anti-money laundering and counter financing of terrorism regime works in practice.
The Caribbean Financial Action Task Force, a regional subsidiary of the global standard setter in this space, released its evaluation report in March 2019, which revealed a wide range of shortcomings. As a result, Cayman was placed under a one-year observation period by the FATF during which it should take recommended action and correct the identified deficiencies.
A total of 11 amendment bills aim to strengthen Cayman’s anti-money laundering framework.
Financial Services Minister Tara Rivers, whose ministry is presenting 10 of the 11 bills, said the proposed legislative changes will strengthen Cayman’s “already extensive AML/CFT regime”.
Minister Rivers said, “The government is committed to addressing the recommendations outlined in the CFATF fourth round mutual evaluation report to further cement our standing as a responsible and responsive jurisdiction in the global fight against money laundering and terrorist financing.”
The Banks and Trust Companies (Amendment) Bill, 2019 aims to ensure that appropriate transparency measures, such as disclosure requirements, are in place for trusts.
As part of the Basel II international banking regulations and in particular Pillar 3, which adds to capital requirements and a supervisory review process certain disclosures to allow market participants to assess the capital adequacy of an institution, the bill would empower CIMA to require licensees who establish a banking business or Cayman banking group to make public disclosures.
The Trusts (Amendment) (No. 2) Bill, 2019 seeks to insert provisions into the Trusts Law that require trustees and the Registrar of Trusts to share information on registered trusts with other competent authorities, provide sanctions for failure to provide competent authorities with required information, and empower Cabinet to make regulations.
The Companies (Amendment) Bill, 2019 will require that a company’s basic information, including a list of directors, is maintained and publicly available. The bill also puts forward stiffer penalties for failure to comply with beneficial ownership obligations under the law.
The Limited Liability Companies (Amendment) Bill, 2019 would ensure that all basic information, including a list of directors, for limited liability companies (LLCs) is publicly available. The bill would also impose sanctions on companies for failure to maintain up-to-date information.
In a similar way, the Limited Liability Partnership (Amendment) Bill, 2019 requires all basic information on a limited liability partnership (LLP) be available at the LLP’s registered office, and stiffer sanctions apply for failing to maintain up-to-date beneficial ownership information.
The Mutual Funds (Amendment) Bill, 2019 and the Insurance (Amendment) Bill, 2019, in turn, would sanction licensees, who provide company management services, for not maintaining current beneficial ownership information on their clients. The mutual funds bill makes it mandatory for auditors and other professionals who become aware of this failure to notify the relevant authority.
The Building Societies (Amendment) Bill, 2019 and the Cooperative Societies (Amendment) Bill, 2019 would prevent persons from holding a significant controlling interest or management function in a financial institution if they are suspected of criminal activity.
The Money Services (Amendment) Bill, 2019 would require money service businesses to monitor their agents’ compliance with their anti-money laundering programmes and ensure these businesses meet AML/CFT requirements.
In addition, the Ministry of Commerce has put forward changes to the Trade and Business Licensing Law demanding that the licensing board considers an applicant’s compliance with anti-money laundering and counter financing of terrorism obligations before it grants, renews or revokes a license.
In June, lawmakers already approved changes to the Proceeds of Crime Law, the Securities Investment Business Law and the Directors Registration and Licensing Law.
The Financial Action Task Force will review the progress made by the Cayman Islands at its June 2020 Plenary to determine if the recommended actions have been taken.
If the degree and quality of progress made by the Cayman Islands do not satisfy the recommended actions, the FATF will issue a public statement regarding the jurisdiction’s AML/CFT deficiencies, develop an action plan, and monitor progress against the action plan.
In addition to the proposed legislative changes to improve Cayman’s anti-money laundering framework, government also seeks to amend the Auditors Oversight Law and the Monetary Authority Law to bring the financial year in line with the Public Management Finance Law and remove inconsistencies.
The Monetary Authority (Amendment) (No. 2) Bill, 2019 would also authorise CIMA as the facilitator of business continuity and disaster recovery, following a natural disaster, the power to exempt any affected person or class of persons from any relevant regulatory provisions for a period and under such conditions as CIMA deems suitable.