Compliance teams across the Cayman Islands need to remain vigilant to a rapidly evolving threat landscape. That was one of the key messages from a 24 Sept. breakfast briefing held by local law and regulatory firm Claritas.
Justine Plenkiewicz, a Claritas co-founder who focuses on regulatory compliance, identified clear trends in emerging risks facing companies on the islands.
“In 2024, 55% of the suspicious activity reports filed involving the Cayman Islands were related to fraud,” said Plenkiewicz, who warned the problem will get worse. One reason the fraud threat will grow is AI. Panellists at the Claritas event noted that AI made it easier for fraudsters to falsify documents and identity checks to circumvent controls.
“The UK and Canada have both issued risk assessments that highlight the growing danger of AI-assisted fraud,” said Plenkiewicz.
Digital-asset dangers
Another possible threat that the event highlighted was the potential lack of compliance in some digital-asset businesses. “This is a risk that the EU has highlighted recently,” said Plenkiewicz.
“Virtual asset service providers tend to grow quickly but sometimes these firms prioritise growing the business over building the necessary compliance capability,” she said. “That means they can have weaknesses in anti-money laundering and combating the financing of terrorism.”
Other digital risks highlighted by Plenkiewicz included cybercrime, such as the $1.5 billion ByBit hack; and corruption, with crypto currencies increasingly used to bribe public officials.
The increasing scale of virtual asset businesses means they work more closely with traditional finance institutions than before. That increases the risk of contagion of any compliance risks to the broader financial sector, noted Plenkiewicz.
The digital risk is especially relevant for the Cayman Islands, which passed the Virtual Asset (Service Providers) Act, with the aim of attracting fast-growing virtual asset businesses. To its credit, the Cayman Islands Monetary Authority has also identified potential VASP risks and taken several regulatory measures over the last year. For example, CIMA updated VASP regulatory policy to ensure licensed firms demonstrate robust compliance with anti-money laundering, risk management and cybersecurity.
Chaotic US compliance
The final threat highlighted was the increasing incoherence of US financial regulators and enforcement agencies. Plenkiewicz highlighted the recent move from the US Financial Crimes Enforcement Network to exempt all US entities from reporting their beneficial ownership information.
When the US Secretary of the Treasury, Scott Bessent, announced the measure in March 2025, he claimed the goal was “to unleash American prosperity by reining in burdensome regulations, in particular for small businesses that are the backbone of the American economy”.
Yet the move runs counter to global trends – and indeed the Cayman Islands’ own efforts – to increase transparency of beneficial owners.
Another example cited by Plenkiewicz was recent flip-flopping over the US Foreign Corrupt Practices Act. In February, US president Donald Trump halted enforcement of the anti-bribery law, although it was later resumed when the Department of Justice issued new guidelines on its enforcement priorities relating to the US FCPA in June 2025.
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