The issue explained: Why Cayman needs to get off the grey list
The Cayman Islands should come off the global ‘grey list’ of countries not doing enough to fight money laundering and terror financing by the end of next month, industry leaders have been told.
Elisabeth Lees, a former prosecutor who was the coordinator of Cayman’s national Anti-Money Laundering Steering Group, believes the island is likely to be removed from the list of non-compliant countries at the next Financial Action Task Force plenary in Paris, scheduled to conclude on 27 Oct.
“On that day we expect we will receive the very good news that Cayman has been removed from that grey list,” she said.
The step is considered critical to the long-term future of the island’s core financial services industry.
The inspection by task force officials in Cayman earlier this month was the final step in a long, collaborative process between government and the private sector that is now approaching the finish line.
“Normally it is very rare that the on-site visit doesn’t lead to removal from the grey list,” said Lees, speaking at a breakfast seminar at George Town Yacht Club last week to coincide with the first anniversary of her legal practice, Claritas.
The firm, which Lees founded along with her former deputy Justine Plenkiewicz and former Harneys partner Katie Pearson last year, specialises in regulatory law and litigation and compliance consultation.
More than 100 financial services industry leaders attended last week’s event.
Lees said October’s anticipated removal from the grey list was an important milestone for the jurisdiction, made possible by strong support from the government and the civil service.
Since Cayman became aware that it was likely to be placed on the list in 2019, the islands have invested significant funds and resources to address weaknesses in its financial crime-fighting infrastructure.
Reforms included establishing a new bureau within the police service to lead complex cross-border money-laundering inquiries and a suite of new rules and oversight for high-risk industries, including real estate and precious metal dealers.
More assessments expected
While October’s plenary could be a moment to celebrate, Lees said Cayman could not rest on its laurels, with the fifth round of mutual evaluations from the Financial Action Task Force set to begin in 2025.
“There is anticipated good news regarding the grey list but, beware, the fifth round is around the corner,” she said.
Global standards are constantly evolving and Cayman is considered a high-risk jurisdiction by regulators because of the size of its financial sector.
That means it is likely to face an earlier Fifth Round Mutual Evaluation as the size of the financial sector is one of the factors considered in terms of prioritisation.
“We expect that the Cayman Islands will be moved forward in the pool of countries to be assessed,” said Lees.
The next set of evaluations is expected to have an even greater focus on how well the jurisdiction is implementing its laws and regulations, she added.
Busy first year for Claritas
Last week’s event also included an overview of the first year of operations for Claritas, which describes itself as a boutique law firm.
Highlights included winning a judgment for the plaintiff, Fortunate Drift Limited, in a two-week fraud trial, and providing regulatory advice and representation across multiple sectors.
The firm has also assisted other countries in relation to mutual evaluations from the Financial Action Task Force and on special projects such as risk assessments.
The business recently bolstered its litigation and insolvency capabilities by recruiting Alexia Adda as counsel this month.
“Claritas Compliance has assisted clients with AML compliance matters, conducted AML audits and taken on a number of AML Officer appointments in a busy first year of operations,” said Lees.
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