Financial Crime World

Comprehensive Anti-Money Laundering (AML) Regime in the Cayman Islands

The Cayman Islands have a robust AML framework that applies to various financial institutions and Designated Non-Financial Business and Professions (DNFBPs). This framework is designed to prevent, detect, and report money laundering activities.

Main AML Legislation

The main AML legislation in the Cayman Islands is the Proceeds of Criminal Conduct Act (As Revised), which requires all relevant entities to implement effective measures to prevent, detect, and report money laundering activities.

Key AML Compliance Requirements

  • Customer Due Diligence: Financial services providers must identify and verify customers, including beneficial owners, controlling persons, and authorized persons.
  • Risk-Based Approach: Institutions must assess and determine the level of money laundering risks associated with each customer and business relationship.
  • Record Keeping: Entities must maintain accurate records of customer identification, verification, and transactions.
  • Internal Controls: Institutions must establish internal controls to monitor business relationships, detect suspicious activity, and conduct regular audits.
  • Designation of AML Compliance Officers: Each entity must designate an Anti-Money Laundering Compliance Officer to develop and implement AML procedures and communicate with regulatory authorities.
  • Reporting Suspicious Activity: Entities must report suspicious transactions to the Monetary Authority (the “Authority”) or, if the transaction involves a virtual asset, the Virtual Asset Service Provider (“VASP”).
  • Training Employees: Financial institutions and DNFBPs must provide ongoing training to employees on AML procedures and compliance requirements.

Sector-Specific Guidance

Different types of institutions in the Cayman Islands may have varying AML compliance requirements due to sector-specific guidance from regulatory authorities. These include:

Institutions with Sector-Specific Guidance

  • Banks: Must comply with regulations set by the Monetary Authority.
  • Fiduciary Institutions: Must follow guidelines issued by the Cayman Islands Monetary Authority.
  • Insurance Businesses: Must adhere to rules and regulations set by the Cayman Islands Insurance and Pensions Supervisory Authority.
  • Mutual Funds: Must comply with requirements set by the Cayman Islands Monetary Authority.
  • Money Services Businesses: Must follow guidelines issued by the Financial Crimes Investigation Unit.
  • Securities Investment Businesses: Must adhere to rules and regulations set by the Securities Investment Business Law (2020 Revision).
  • Virtual Asset Service Providers: Must comply with requirements set by the Virtual Asset Service Provider Regulations.

Conclusion

In summary, the Cayman Islands have a robust AML framework that requires financial institutions and DNFBPs to implement effective measures to prevent, detect, and report money laundering activities. The specific requirements for each type of institution may vary due to differences in regulatory laws and sector-specific guidance.