On the eve of being reassessed by the Financial Action Task Force, the Cayman Islands government said it had made significant achievements in responding to a critical evaluation of its anti-money laundering regime.
The evaluation report released in March 2019 by the Caribbean Financial Action Task Force, the FATF’s regional affiliate, found major shortcomings in the jurisdiction’s ability to analyse and understand the risks from money laundering and terrorism financing.
It highlighted that large money-laundering investigations and prosecutions were non-existent in the islands and that the Financial Reporting Authority, which handles suspicious activity reports from financial services providers, was rarely used to initiate investigations.
Cayman’s anti-money laundering risk assessment had also not sufficiently considered legal persons and arrangements. And it had not analysed the risks stemming from a lack of supervision of lawyers or excluded persons under the Securities Investment Business Law, the report concluded.
The FATF placed Cayman under observation to implement a total of 49 recommendations made by the CFATF in its evaluation.
This observation period ended on 23 Oct. The FATF will now determine whether sufficient progress has been made. The FATF’s verdict is expected to be announced in February 2021.
Attorney General Samuel Bulgin said in a press release, “Despite continuing to deal with ongoing challenges to the jurisdiction from a major global pandemic, the Cayman Islands has taken its requirements to meeting the CFATF’s recommended actions very seriously and acted strenuously in this regard.
“As such, the actions taken collectively highlight our commitment to ensuring that the Cayman Islands obtains positive ratings from global standard setters as well as continuing to remain at the forefront of the financial services jurisdictions in the world.”
In response to the criticism, Cayman updated its national anti-money laundering strategy and laid out an action plan that covered topics from sanctions to supervisory frameworks.
The government conducted targeted risk assessments of terrorist financing, so-called excluded persons under the Securities Investment Business Law, entities operating in the special economic zone, non-profit organisations, and factors relating to Cayman being an international financial centre.
Non-financial businesses and professionals that were previously not supervised under the anti-money laundering regime, such as attorneys, real estate developers, realtors, precious metal dealers and accountants, are now under the supervision of dedicated bodies and subject to fines when in breach of the Anti-Money Laundering Regulations.
This year, the Cayman Islands Monetary Authority, the jurisdiction’s financial regulator, became the supervisor of registered persons – the previously unregulated excluded persons – for anti-money laundering purposes.
The Royal Cayman Islands Police Service, meanwhile, formed a dedicated Bureau of Financial Investigations to investigate complex, cross-border, financial crimes.
The government said that to date 50 investigations have been undertaken, of which 30 are ongoing.
In September 2020, government provided Customs and Border Control with additional resources, such as high-resolution image scanners, to help seize the proceeds of crime as they enter Cayman.
To help enforce sanctions, the Financial Reporting Authority established a subscription service that forwards sanction notices as soon as they have been issued, while financial services providers regulated by CIMA will receive sanctions notifications directly.
To increase transparency, the names of company directors, including alternate directors, as well as managing members of limited-liability companies are now available from the Registrar of Companies.
Since last month, further information including authorised share capital, has also been publicly available.
Cayman further updated legislation regarding legal arrangements, formalising a trustee’s AML responsibilities and allowing government agencies, law enforcement and competent authorities the mechanism to request information from a trustee.
These measures were supported by in-person training for financial institutions, designated non-financial businesses and professionals, and non-profit organisations.
In addition, Cayman Finance has been hosting an eLearning platform, providing free courses related to ‘Fighting Financial Crime in the Cayman Islands’ .
A national advertising campaign emphasising that the responsibility for fighting financial crime is everyone’s business was also launched in early 2020.
The national coordinator for government’s Anti-Money Laundering Steering Group, Elisabeth Lees, said “while great strides have already been made, we remain committed to continuing to improve and enhance standards for the jurisdiction, as a matter of national priority”.
She said robust standards are essential to help attract quality, sustainable business.
“Much of the work we have already undertaken so far in this regard places the Cayman Islands very much in line with international standards,” Lees added.