Financial Crime World

Cayman Islands Tightens KYC Procedures to Boost Compliance with AML/CFT Regulations

The Cayman Islands has implemented new anti-money laundering (AML) and countering of terrorist financing (CFT) regulations to strengthen its financial sector’s compliance with international standards. The revised Anti-Money Laundering Regulations (2020) and updated Guidance Notes aim to enhance the country’s reputation as a reputable offshore financial center.

Key Changes

  • Removal of Equivalent Jurisdiction List: Financial services providers are no longer required to apply a blanket approach when assessing countries. Instead, they must conduct their own country risk assessments and record them on customer files.
  • 10% Beneficial Ownership Threshold: Identification and verification of beneficial owners of legal persons above the 10% threshold is now required. This aims to align the Cayman Islands with international standards and enhance transparency in the financial sector.
  • Revised Eligibility Criteria for Introducers: Eligible introducers must provide KYC confirmations that include the applicant’s beneficial owners, and financial services providers are required to periodically test these introducers to ensure compliance with AML/CFT regulations.

Sanctions Lists and Countering Terrorist Financing

  • Monitoring Customers against Sanctions Lists: Financial institutions must monitor customers against applicable sanctions lists, including EU and UN lists extended to the Cayman Islands through UK statutory instrument.
  • Targeted Financial Sanctions: Financial institutions must have procedures in place to identify assets subject to targeted financial sanctions and ensure compliance with these obligations.

Fund Administrators Take Note

  • Risk-Based Approach for Investors: Fund administrators must apply a risk-based approach when assessing investors, including verifying beneficial ownership of legal persons above the 10% threshold.

CIMA Publishes Formal Guidance

The Cayman Islands Monetary Authority has published updates to the Guidance Notes addressing topics such as:

  • Assessing Risk and Applying a Risk-Based Approach
  • Counter-Proliferation Financing
  • Targeted Financial Sanctions
  • Ongoing Monitoring
  • Virtual Asset Service Providers

These changes aim to strengthen the country’s financial sector’s compliance with international AML/CFT standards.

For Further Information

For more information on how these changes may affect your organization, please contact your Maples Group contact or one of our experts.