The Cayman Island Monetary Authority has imposed discretionary fines of $4.23 million on corporate services provider Intertrust for breaches of the Anti-Money Laundering Regulations.
It is the largest-ever penalty handed down by the financial regulator for AML failings.
The financial regulator said the fines are the result of Intertrust’s “pervasive and protracted history of non-compliance” with the AML regulations and the company’s failure to remediate significant breaches.
CIMA said the breaches concerned the application of customer due diligence measures, the failure to verify the source of funds and to obtain documentation on the purpose and nature of business relationships.
The regulator also noted the failure to identify beneficial owners, to perform ongoing monitoring and to consider all relevant risk factors.
The fines followed an onsite inspection by the regulator in February 2020 and CIMA said similar findings had been identified in previous onsite inspections.
Intertrust, which has more than 4,000 employees in 30 jurisdictions, said in a statement, “The breaches alleged are administrative in nature and there is no suggestion that Intertrust has engaged in or facilitated its clients engaging in money laundering activities.”
The notice gives Intertrust 30 days to lodge an appeal against the fines. The company said it is “currently engaged with counsel to consider all available options in response to this notice”.
“Intertrust recognises the seriousness of the matter and is committed to make every effort to fulfil its role as gatekeeper,” the company added.
The fines were made public in an enforcement notice on the same day Maples Group announced that two of its entities – MaplesFS Limited and Maples Corporate Services Limited – had been granted a judicial review of the way the Monetary Authority applies the AML regulations in practice.
Maples said the regulator had changed what is required under the AML regulations without informing or consulting service providers. The obligations imposed by CIMA on its service companies were neither necessary under the regulations nor proportionate in the specific context, the group said.
Cayman’s financial regulator is under international pressure to impose heavier fines, after the Financial Action Task Force, in February, placed the Cayman Islands on a grey list of countries whose AML practices are under increased monitoring.
Cayman is undergoing a 15-month period during which it must implement an action plan agreed with the FATF.
The international standard setter in the AML space is among others demanding stricter sanctions for financial institutions that breach the regulations and for those who do not accurately identify the beneficial owners of Cayman entities.
As a result of the FATF greylisting, Cayman is expected to also be added to the European Union’s money laundering blacklist when that list will be updated.
CIMA said it will treat AML breaches “with particular seriousness and take appropriate enforcement or other actions where necessary”.