Financial Crime World

Cayman Islands Introduces Anti-Money Laundering Guidelines for Financial Firms

The Cayman Islands has introduced new anti-money laundering (AML) regulations aimed at preventing financial crimes and ensuring transparency in the country’s financial sector. The Anti-Money Laundering Regulations (AMLRs), implemented by the Cayman Islands Anti-Money Laundering Unit (CARA), impose strict obligations on all persons engaged in relevant financial businesses.

Key Requirements

  • Financial institutions must implement a robust AML/Combating the Financing of Terrorism/Country of Primary Residence framework, which includes measures for customer due diligence, risk assessment, and ongoing monitoring.
  • Designate a Money Laundering Reporting Officer (MLRO) and Deputy MLRO, who will be responsible for reporting suspicious transactions.
  • Undertake customer due diligence measures when:
    • Establishing a business relationship
    • Carrying out a one-off transaction valued at over CI$10,000
    • Suspecting money laundering or terrorist financing

Risk Assessment and Due Diligence

  • Financial institutions must identify, assess, and understand their AML/CFT/CPF risks in relation to customers, countries, products, services, and transactions.
  • Keep the risk assessment current and repeat customer due diligence at appropriate intervals.

Sanctions Awareness and Training

  • Financial institutions must:
    • Be aware of all relevant and applicable financial sanctions
    • Consult these lists during customer due diligence and ongoing monitoring
    • Provide employees with training on the recognition and treatment of transactions carried out by or on behalf of individuals engaged in money laundering, terrorist financing, or proliferation financing.
    • Make employees aware of internal systems and controls in place to comply with the regulations.

Firms of Attorneys-at-Law

  • Firms carrying out relevant financial business must have:
    • Appropriate systems and controls in place to monitor and report on AML/CFT/CPF activities
    • Procedures for reporting suspicious transactions

Consequences of Non-Compliance

  • Failure to comply with the AMLRs can result in:
    • Administrative fines from CARA
    • Criminal prosecution by the Office of the Director of Public Prosecutions

Conclusion

The Cayman Islands’ anti-money laundering regulations aim to protect the country’s financial sector from illicit activities and ensure compliance with international standards. Financial institutions are advised to familiarize themselves with the new regulations and implement necessary measures to prevent money laundering, terrorist financing, and proliferation financing.