Cayman placed on FATF grey list

Under increased monitoring of anti-money laundering practices

FATF President Markus Pleyer speaking online at a press conference on Thursday.

The Financial Action Task Force has added the Cayman Islands to its grey list of countries whose anti-money laundering (AML) practices are under increased monitoring.

The global anti-money laundering standard setter blamed a lack of fines and enforcement actions by Cayman’s regulatory bodies for the move.

It comes two years after its regional body, the Caribbean Financial Action Task Force, released a critical mutual evaluation report that highlighted a range of shortcomings in Cayman’s AML regime.

Speaking at a press conference on Thursday, FATF President Marcus Pleyer said Cayman must improve “in the area of sanctions on financial institutions for AML breaches” and its regulators “must show that they penalise those who do not provide accurate up-to-date beneficial ownership information”.

“These are two crucial issues,” Pleyer said. Noting that the Cayman Islands is a major financial centre, he added, “From countries [that] have higher risks, we expect commensurate measures against this risk and that is the reason why the Caymans are now on the so-called grey list.”

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While not as severe as the FATF’s blacklist, which currently only includes the uncooperative countries Iran and North Korea, being placed on the grey list is still a reputational blow for the Cayman Islands.

The FATF does not call for the application of enhanced due diligence with regard to grey-listed countries, but encourages its members to take the noted deficiencies into account in their risk analysis.

Cayman will now have to work on implementing an agreed action plan within the next 15 months under the monitoring of the FATF and the CFATF.

The FATF said Cayman has made a high-level political commitment in February 2021 to work with the two organisations to strengthen the effectiveness of its AML regime.

The action plan focuses on applying effective, proportionate and dissuasive sanctions and taking administrative penalties and enforcement actions to ensure that breaches are quickly remediated.

Those who do not file accurate and up-to-date beneficial ownership information should also face effective sanctions.

In addition, Cayman, in line with its risk profile, must demonstrate that all types of money laundering are prosecuted and that such prosecutions result in proportionate penalties.

As well as Cayman, the FATF added Morocco, Burkina Faso and Senegal to the list of countries under increased monitoring.

Other countries already on the grey list are Albania, Barbados, Botswana, Cambodia, Jamaica, Mauritius, Myanmar, Nicaragua, Pakistan, Panama, Syria, Uganda, Yemen and Zimbabwe.

The FATF noted that since the completion of its mutual evaluation report in November 2018, the Cayman Islands had made progress on a number of the recommended actions.

This included an update of the national AML strategy; conducting a terrorism financing risk assessment as well as a number of sectoral risk assessments; amendments to the AML regulations and Proceeds of Crime Law; designating an AML regulator for non-financial business and professionals that are subject to AML rules; and creating a new Bureau of Financial Investigations for investigating money laundering offences.

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2 COMMENTS

  1. Just watched McMafia on Netflix.
    Where was the dodgy hedge fund manager sending his money? One guess.

    I understand that Netflix is making a movie here.
    Shame it can’t be one featuring some hapless criminal trying, without success, to open a bank account and company here.
    And then how the strenuous efforts made by all local financial institutions to cooperate with other countries that enabled this criminal to be prosecuted.