The Cayman Islands will be removed on 7 Feb. from the European Union’s list of nations with deficits in their anti-money laundering and countering the financing of terrorism regimes.
The decision comes in the wake of Cayman’s removal from the Financial Action Task Force’s grey list in October and the UK’s list of high-risk jurisdictions in December.
Deputy Premier André Ebanks said: “The Cayman Islands Government fully understands the significance of this achievement, and what it means for our international reputation.”
He thanked the dedication of the civil servants, regulators and industry members who “walked the talk, earning our regime this recognition as a sound place for business”.
The deputy premier, who is also minister of financial services, added in a press release: “We reaffirm our commitment with each milestone we achieve.”
The EU Commission published a delegated regulation on 12 Dec. on the removal of the Cayman Islands from a 2016 list, detailing it as a ‘high-risk’ nation.
The body said the decision came following the measures Cayman implemented to address the action plans agreed with the FATF and its removal from the grey list.
It added that the Cayman Islands has “remedied the strategic deficiencies” and no longer poses a significant threat to the EU’s financial system.
The deputy premier thanked EU officials and said discussions, on a range of financial services matters, had been “incredibly useful in deepening our mutual understanding”.
“I particularly note the positive, open approach that increasingly characterises our relationship,” he said.
“Being removed from the EU’s anti-money laundering list paves the way for further dialogue on the policy goals we pursue.”
New opportunities
Cayman’s financial industry representative Cayman Finance welcomed the news and credited public and private sector leadership for the progress that led to the achievement.
CEO Steve McIntosh, in a press release, said the government and financial services industry share a solid commitment to ensuring that the jurisdiction meets global standards.
All while protecting the rights of investors, asset managers and other clients, he said.
“The EU’s acknowledgement of the strength of the Cayman Islands’ AML regime is just the most recent example of how we collaborate to translate that commitment into an effective legal and regulatory framework.”
The EU’s decision eliminates a requirement that European investors conduct enhanced due diligence of Cayman Islands’ entities.
It also means that the establishment in Cayman of securitisation special purposes entities – that isolate and manage financial assets – is not prohibited.
“Ensuring our legal and regulatory regime meets global standards opens up new opportunities for investors,” McIntosh said.
“We look forward to using this development to promote the Cayman Islands financial services industry as an innovative leader that offers stability and growth.”
Critical issues addressed
Cayman was removed from FATF’s grey list on 27 Oct., following a three-day meeting of the FATF Plenary in Paris.
The list is for nations that have inadequate anti-money laundering, terrorist-financing, and proliferation-financing measures but are actively working on improving them.
Cayman’s removal from that group after over two years meant it was considered to have adequately addressed those weaknesses.
FATF president Marcus Pleyer listed “two critical issues” when Cayman was placed on the grey list in February 2021.
Firstly, it needed improvements “in the area of sanctions on financial institutions for anti-money laundering breaches”.
And secondly, regulators needed to “show that they penalise those who do not provide accurate up-to-date beneficial ownership information”, he said.
FATF’s decision to delist the Cayman Islands completed the territory’s participation in the fourth-round mutual evaluation process.
It will commence its fifth-round process in 2025, with Cayman’s evaluation expected to begin in 2026.
On 5 Dec., the UK government also had officially removed Cayman from its list of high-risk countries for anti-money laundering and counter terrorism funding.
It again came as a result of the territory’s removal from the FATF grey list.
Register of beneficial ownership
A new transparency law, passed in November, allows access to beneficial ownership information as part of anti-money laundering and counter-terrorist financing investigations.
Ebanks moved the second reading of the Beneficial Ownership Transparency Bill 2023 in Parliament.
“It’s a bill that provides for the consolidation and enhancement of the beneficial ownership legislative framework into a single act,” he told sitting members.
The Cayman Islands has been collecting beneficial ownership information – details on who ultimately owns or controls an asset or entity – for over two decades.
However, over the last seven or eight years, matters have become “voluminous”, the minister of finance said.
He noted that the law provides for “incidental and connected” purposes such as addressing evolving global standards.
It will allow access to information to people with a “genuine need to seek information” to combat money laundering or terrorist financing, Ebanks explained.
But this does not include general public access, he stressed.
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