Lawmakers pass raft of anti-money laundering bills

Members of the government during the Legislative Assembly debate on 20 May.

Members of the Legislative Assembly have adopted four bills related to Cayman’s regime for anti-money laundering and the countering of terrorism financing.

Amendments to the Companies Law and the Limited Liability Companies Law introduce stricter administrative fines for Cayman’s beneficial-ownership regime, and ensure basic regulatory powers are listed on a company register and made available for public inspection.

Changes to the Trusts Law and the Banks and Trust Companies Law provide clarification for individuals conducting trustee services as a business.

The bills had to be pushed through the parliamentary process quickly because Cayman is still under pressure to address deficiencies in it is anti-money laundering regime identified by a Caribbean Financial Action Task Force mutual evaluation report published in March last year.

Speaking in the Legislative Assembly on Wednesday, Premier Alden McLaughlin said Cayman is undergoing a re-rating application process with the Financial Action Task Force and the attorney general has to provide a report by 25 May on behalf of the government on “where we are at the legislative front”.

The four bills together with the new Virtual Asset Service Providers Law deal with aspects highlighted by the CFATF that required legislative change, McLaughlin said.

The government expects Cayman’s technical re-rating by the CFATF to be announced in October, with the FATF’s review and final rating to be completed shortly thereafter.

Financial Services Minister Tara Rivers said the amendments to the Companies and the Limited Liability Companies Law address two of the 63 recommended actions raised by the CFATF by further improving the beneficial ownership regime.

The CFTAF rated Cayman only partially compliant in terms of beneficial ownership transparency, citing challenges in verifying the information and a lack of effective sanctions for non-compliance.

While the first point was addressed in amendments adopted in January, the new changes introduced more dissuasive penalties of $5,000 for an initial breach, followed by a $1,000 fine for each month of non-compliance.

The bills also amended the particulars that must be provided by companies upon registration. These now include the nature of business, the financial year-end, the details of the initial subscribers and the authorised share capital. This information will be made publicly available for a $50 fee.

Another amendment shifts the responsibility for issuing restrictions notices from companies to corporate service providers. These notices are issued if a beneficial owner does not provide requested information and restricts what the beneficial owner can do with the interest in the company until there is compliance.

The change was needed, Rivers said, because not a single restrictions notice had been filed in the first two years since initial legislation was put in place. Corporate service providers had also agreed that having the power to issue restrictions notices would add weight to their requests for information from beneficial owners.

Changes to the Trusts, and Banks and Trust Companies laws clarified that, unless they are exempt, individuals must have a licence to carry on trust business and empower the Cayman Islands Monetary Authority to impose administrative fines.

The Trusts Law amendments also makes clear that information on trusts may only be requested from the Registrar of Trusts by a competent authority, which now includes Customs and Border Control.

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  1. It doesn’t matter. Nothing will satisfy the EU other than these islands sinking beneath the waves. They might well get their wish in about 100 years if the sea level rises.

    Meanwhile it’s possible to form companies with fake information online in the USA and UK without anyone checking anything.