Financial Crime World

Cayman Islands Funds: AML Measures - Compliance Guidance

The Cayman Islands, a major financial hub, has implemented anti-money laundering (AML) measures to prevent the misuse of its financial system. The Financial Intelligence Authority and the Monetary Authority have issued regulations requiring entities operating funds in the Cayman Islands to implement effective AML measures.

Suspicious Transactions

Entities operating funds must be aware of suspicious transactions, including:

Series of Smaller Transactions

  • May indicate money laundering or terrorist financing activities

One-Off Wire Transfer

  • Require careful examination to ensure they are legitimate

Customer Identification and Due Diligence

To prevent AML risks, entities must:

  • Identify Customers: using reliable, independent sources
  • Verify Customer Identity: using documents, data, or information
  • Authorise Representatives: acting on behalf of customers
  • Identify Beneficial Owners: and verify their identities
  • Obtain Information: about the purpose and nature of business relationships

Ongoing Due Diligence

Entities must conduct ongoing due diligence to ensure transactions are consistent with customer profiles. This includes:

Scrutinizing Transactions

  • For suspicious activity

Ensuring Documents, Data, or Information Remain Current and Relevant

  • Implementing risk-management systems to identify:
    • Politically exposed persons
    • Family members
    • Close associates

Risk-Based Approach

Entities must adopt a risk-based approach to identify, assess, and understand AML risks. This includes assessing risks related to:

Customers

Products

Services

Delivery Channels

Employee Screening and Training

Prospective and current employees should be screened to ensure high standards. Employees must also receive training on AML procedures, including the recognition and treatment of suspicious transactions.

Compliance Measures

Entities operating funds in the Cayman Islands must:

  • Review Existing Procedures: customer identification/KYC
  • Appoint Required Officers: Compliance Officer, MLRO, and Deputy MLRO
  • Adopt and Maintain Manuals: anti-money laundering manuals and ancillary logs and reports
  • Engage Service Providers: to ensure compliance with AML measures

Seeking Specialist Advice

For specific guidance on AML measures in the Cayman Islands, please contact:

Chris Humphries, Managing Director

Jonathan McLean, Partner

Megan Wright, Partner

Stuarts Humphries is a leading Cayman Islands legal practice providing corporate and commercial legal advice. Our experienced attorneys assist clients with significant commercial transactions, structures, liabilities, and obligations.

For more information, visit our website at www.stuartslaw.com.