The Cayman Islands Monetary Authority has fined Cainvest Bank and Trust Limited $100,000 for failings in the bank’s anti-money laundering practices.
The discretionary fine was for breaches of Cayman’s Anti-Money Laundering Regulations. The financial services regulator said it found instances where the bank had not applied customer due diligence and enhanced due diligence measures; it had not identified beneficial owners; and it had failed to scrutinise certain transactions.
In some cases, the bank had not remediated similar findings from an onsite inspection carried out in 2018.
“This case highlights the importance of licensees having in place effective AML/CFT/PF policies and procedures which are appropriate, effective and fully implemented in order to avoid the risk of money laundering, terrorist financing or proliferation financing,” CIMA said in a public enforcement notice on 10 Nov.
In a statement, Bank Cainvest said the fine related to its “private banking business line which is no longer operational”.
Cainvest is one of only nine banks with a local Class A banking licence.
The bank is headquartered in the Cayman Islands and, at the outset, offered private banking services for family offices, institutional clients and high-net-worth individuals.
The Brazilian family conglomerate Cohab/Aboulafia Group acquired Sul America International Bank in Cayman in 2011 and turned it into Cainvest International Bank. In 2012, the bank listed on the Cayman Islands Stock Exchange.
In 2015, Cainvest bought the Cayman banking operations of corporate services provider Intertrust and changed its name to Cainvest Bank and Trust.
Two years later, Cainvest acquired the securities business of Dartley Bank and Trust in the Bahamas.
Bodden Town West MLA Chris Saunders is a director of Cainvest Bank, according to a 2019 declaration made in the Legislative Assembly’s registry of interests.
Bank Cainvest said the personnel responsible for compliance when the breaches occurred are no longer employed by the bank.
“Our current Compliance Officer, Mrs. Elaine Humphreys, joined the Bank after the breaches set out in the Notice were identified and has been working assiduously to ensure that the Bank is compliant with all relevant Cayman Islands Regulations,” the statement said.
Cainvest said its banking representation and digital banking business lines that are currently offered are in good standing with CIMA and were not linked to the now-defunct private banking business.
“The Bank’s decision to exit from the Private Banking business is in line with our philosophy of prioritising the highest standards of compliance,” Cainvest said.
According to an article published in September by Brazilian weekly magazine Época, Cainvest was mentioned in a recently leaked suspicious activity report filed with the Financial Crime Enforcement Network (FinCEN), an agency of the US Treasury Department.
One of the documents allegedly linked Cainvest to a US$2.3 million transfer by Unifleisch S/A, a Swiss subsidiary of JBS Group, one of the largest meat producers in the world, which was formerly controlled by Joesley and Wesley Batista, who are linked to a corruption-and-kickback probe in Brazil.
According to Época, the suspicious activity report (SAR) noted the apparent legality of Cainvest’s activity but it flagged the source of funds as suspicious.
Joesley Batista has admitted to bribing more than 1,800 politicians, including three former Brazilian presidents, through the family holding company, J&F Investimentos, which agreed to pay US$3.2 billion in penalties and fines.
A Brazilian Parliamentary Inquiry Committee found that some kickbacks were paid to obtain about US$2 billion in loans and financing for JBS from the Brazilian Social and Economic Development Bank.
There is no indication that CIMA’s enforcement action relates to the transaction mentioned in the SAR or that the transaction itself involved any wrongdoing.
Commenting on the suspicious activity report mentioned in the Brazilian press, the bank said: “Cainvest is not aware of the suspicious activity report filed with FinCen and is a stranger to the allegations made in Época.”
Cainvest added, “We dissociate ourselves entirely from any link to the wrongdoing on the part of the individuals and entities described in [the] article.”
EDITOR’S NOTE: This article was amended to reflect Cainvest’s comments on the article published by Epoca.