Cayman fights misuse of business entities

Lisa Maria Poelzer, an Austrian Federal Ministry of Finance lawyer, Justine Plenkiewicz, deputy national coordinator of Cayman’s Anti-Money Laundering Steering Group, and Gabriele Dunker, executive director of Financial Transparency Advisors, speak after the event.

Cayman Islands Monetary Authority and the Anti-Money Laundering Unit hosted a training session on 8 Nov. for business representatives, government and regulators to better identify the risks of misusing legal persons and arrangements, such as companies, partnerships and trusts, for financial crime.

Five presenters explained the various risks to an audience of 150 lawyers, accountants, realtors, financial institutions, and trust and corporate services providers.

“It’s important that as a jurisdiction, we consistently improve our knowledge and understanding of our risks,” said Elisabeth Lees, National Coordinator for Cayman’s Anti-Money Laundering Steering Group, in a press release.

By improving the awareness of risks, Cayman is responding to recommendations by the Caribbean Financial Action Task Force which identified certain weaknesses in its evaluation of Cayman’s anti-money laundering regime. Cayman has until February 2020 to make positive and tangible progress toward the recommended actions.

Gabriele Dunker, executive director of Financial Transparency Advisors, an international consultancy that is supporting Cayman in its response, said, “The CFATF recommended actions can be quite abstract at times, and FTA is helping the Cayman Islands turn the recommended actions into tangible outcomes.”

The presenters used case studies to demonstrate the practical application of Cayman’s legal framework to counter money laundering, the financing of terrorism and proliferation financing.

Dunker discussed how Cayman-domiciled legal persons have been used to commit financial crime, while Lees explained how a legal person could become subject to criminal prosecution. Robert (RJ) Berry, director of the Financial Reporting Authority, in turn spoke about the role of the anti-money laundering reporting officer.

Drawing on local case studies, Angelina Partridge, CIMA’s acting deputy general counsel, provided a regulatory perspective on the misuse of legal persons. Andy Spilsbury, from Tri-bridge Compliance Partners, demonstrated how professional money launderers actively sought to evade customer due diligence requirements in several jurisdictions around the world, including Cayman.

Lees said that increasing the private sector’s understanding of risks will strengthen the anti-money laundering regime, prevent criminals from misusing Cayman entities, and improve the jurisdiction’s reputation.