Following its removal from the Financial Action Task Force anti-money-laundering list in October, the UK has removed the Cayman Islands from its list of high risk jurisdictions and the European Union is in the process of doing so.
As of 5 Dec., the UK government had officially removed Cayman from its list of high-risk countries for anti-money laundering and counter terrorism funding.
“As a result of our FATF delisting, we expected the Cayman Islands to be removed from the UK high risk list (in addition to reduced ratings in other countries). I’m therefore grateful that following discussions with Her Excellency, Governor Jane Owen and other relevant UK Government officials, Cayman has been removed,” Deputy Premier and Minister for Financial Services André Ebanks said in a statement Friday.
Removal from EU list under way
The EU Commission published a delegated regulation last week regarding the removal of the Cayman Islands from its anti-money-laundering list.
That document, issued on 12 Dec., referred to the removal of Cayman and Jordan from the FATF grey list in October this year.
It stated, “Following the measures implemented to address the action plans agreed with the FATF, the Cayman Islands and Jordan have remedied the strategic deficiencies in their respective AML/CFT [anti-money laundering and counter terrorism financing] regimes and no longer pose a significant AML/CFT threat to the international financial system.
“Taking into account their relevance under the revised methodology, the
Commission considers that these jurisdictions no longer have strategic deficiencies in their respective AML/CFT frameworks and do not pose a significant threat to the financial system of the EU.”
While the delegated regulation marks the first official step towards Cayman’s delisting, the regulation is not yet in force. The government said it expects, “as per previous EU protocol, that there will be further movement on this matter next month”.
Ebanks said in the statement, “We’re pleased to see the EU take this step with regards to the Cayman Islands and their AML listing which accords with our correspondence with the EU on this matter.
“It is therefore a credit to our sustained AML reforms and proactive engagement with EU officials and decision makers that we are advancing towards delisting early next year.”
Beneficial ownership commitment
In another statement issued Friday, the Cayman Islands government announced it had updated its 2019 commitment to the UK by introducing plans to enhance Cayman’s beneficial ownership framework by the end of 2024 “to continue the fight against illicit financial flows”.
“We recognise that the UK continues to champion anti-money laundering and counter-terrorist financing efforts,” Ebanks said. “As such, the Cayman Islands greatly values our partnership with the UK, along with our sister Overseas Territories and Crown Dependencies, to protect the global financial system and the public from criminality and illicit financial flows.”
The statement noted that over the course of 2024, the Ministry of Financial Services and Commerce will work with stakeholders to allow the introduction of an enhanced beneficial ownership framework under the new Beneficial Ownership Transparency Act, which was published Friday.
“This framework will make strides towards greater transparency, in accord with the updated commitment to the UK and also to prepare for the Financial Action Task Force’s 5th Round of Mutual Evaluations,” Ebanks said.
A “beneficial owner” is an individual who ultimately owns or controls an entity. In addition to money laundering and terrorist financing, beneficial ownership information is used to fight tax-related illicit activities, the statement noted.
Cayman Finance, which represents the interests of the islands’ financial services industry, welcomed the government’s updated commitment to the UK with respect to Cayman’s beneficial ownership framework.
It noted that the 2019 commitment initially aimed to introduce fully publicly accessible registers of beneficial ownership in all UK overseas territories by the end of 2023. However, the European Court of Justice, in November 2022, issued a judgment that declared unfettered public access to beneficial ownership information in Luxembourg and other EU member states was a disproportionate interference with the data protection and privacy rights guaranteed under the European Charter of Fundamental Rights.
“Similar rights are guaranteed under the Cayman Islands Constitution and the European Convention on Human Rights, to which the Cayman Islands is a signatory. This makes the introduction of a fully accessible beneficial ownership register in the Cayman Islands constitutionally unsound,” the organisation stated.
Under the newly published Beneficial Ownership Transparency Act, the only people who could access beneficial ownership information are members of the public who can demonstrate a legitimate interest in seeking the information to fight or prevent money laundering and terrorist financing.
Cayman Finance said it supports any planned changes to the beneficial ownership register that will “strike the appropriate balance between a legitimate interest in beneficial ownership transparency and Cayman’s constitutionally protected data protection and privacy rights”.
It added that it was in favour of adopting global standards and the implementation of a public register once it becomes the global standard.
Related Videos
