Threshold Reporting Requirements in the Cayman Islands

In an effort to combat money laundering and terrorist financing, the Cayman Islands has introduced various reporting requirements for financial institutions and businesses operating within its borders. These regulations aim to ensure that suspicious transactions are reported promptly and effectively.

AML Threshold Reports

Under the AML (Money Services Business Thresholder Reporting) Regulations, 2020, money service businesses must report specific details to the Financial Reporting Authority (FRA) for “threshold transactions” exceeding US$3,500 in a single transaction or through multiple transfers within a one-month period.

Banks are also required to furnish the FRA with monthly reports on all “threshold transfers” involving single wire transfers sent or received by the bank where the total money transferred equals or exceeds US$100,000.

Customs and Border Control Requirements

The Customs and Border Control (Money Declarations and Disclosures) Regulations, 2019, impose requirements for individuals entering the Cayman Islands carrying $10,000 or more. These individuals must declare this amount in writing to customs, and failure to do so can result in fines up to US$10,000, imprisonment up to one year, or both.

Routine Transaction Reporting

While there are no specific thresholds for reporting routine transactions, financial institutions and businesses are required to adopt a risk-based approach to identify and report suspicious activity. This includes:

Collecting and maintaining payer/payee information for wire transfers
Reporting persistent non-compliance, restrictions, or termination of business relationships to the FRA

Cross-Border Transactions

The Regulations require financial service providers to evaluate AML risks associated with different countries when dealing with cross-border transactions. They must also:

Identify incomplete transfers
Establish risk-based policies and procedures for executing, rejecting, or suspending wire transfers if necessary information is missing

Customer Identification and Due Diligence

Financial institutions are required to obtain customer due diligence (CDD) information, including proof of identity and address. If unable to do so, they should:

Refrain from initiating or continuing business relationships
File a Suspicious Activity Report (SAR)

Reporting Suspicious Activity

Under the Prevention of Crimes Act, individuals must report suspicions of money laundering or criminal conduct promptly to a designated officer. Financial institutions are required to obtain CDD information and, if unable to do so, should:

Refrain from initiating or continuing business relationships
File a SAR

The Regulations authorize supervisory authorities and relevant bodies to exchange essential information to assess risks associated with money laundering. A framework also exists for public-private information sharing between government authorities and financial entities to boost AML efforts.

Beneficial Ownership Information

The Cayman Islands operates under a beneficial ownership regime, which regulates the collection, maintenance, and sharing of information about the ultimate beneficial ownership or control of Cayman Islands companies and limited liability companies. This information is available to assist financial institutions with their anti-money laundering customer due diligence responsibilities as well as to government authorities.

Conclusion

In conclusion, the Cayman Islands has implemented various reporting requirements to combat money laundering and terrorist financing. Financial institutions and businesses operating within its borders are required to report suspicious activity promptly and effectively, ensuring that the country remains a stable and secure financial hub.