Financial Crime World

Cayman Islands Strengthens Financial Institution Compliance with New AML Rules

The Cayman Islands Monetary Authority (CIMA) has issued new guidelines for financial institutions to comply with anti-money laundering (AML) regulations, aiming to strengthen the fight against money laundering and terrorist financing in the region.

Internal Controls Key to Compliance

Financial institutions must establish internal controls to prevent and detect money laundering and terrorist financing. This includes:

  • Identifying and verifying customers
  • Assessing risks
  • Implementing measures to monitor business relationships
  • Designating an Anti-Money Laundering Compliance Officer to develop and maintain procedures

AML Reporting Requirements

Financial institutions are required to report suspicious activities to the CIMA and appoint a Money Laundering Reporting Officer (MLRO) to handle these reports. The MLRO will be responsible for:

  • Monitoring transactions
  • Reporting any suspicious activity to the authorities

Sector-Specific Guidance Issued

The CIMA has issued sector-specific guidance for different types of financial institutions, including:

  • Banks
  • Fiduciary institutions
  • Insurance businesses
  • Mutual funds
  • Money services businesses
  • Securities investment businesses
  • Virtual asset service providers

These guidelines provide additional requirements tailored to each sector’s unique risks and challenges.

Designated Non-Financial Businesses and Professions (DNFBPs) Subject to Separate Requirements

DNFBPs, including:

  • Law firms
  • Accounting firms
  • Real estate agents

are subject to separate AML regulations issued by their respective regulatory bodies. These regulations require DNFBPs to establish internal controls and procedures to prevent money laundering and terrorist financing.

Payment Services and Money Transmitters Require Licensing

The Cayman Islands Monetary Authority has established a licensing regime for payment services businesses and money transmitters. Any person conducting these types of business activities must obtain a license from the CIMA before operating in the region.

Virtual Asset Service Providers Subject to AML Requirements

Virtual asset service providers, including:

  • Cryptocurrency exchanges
  • Custodians

are also subject to AML requirements. These entities must establish internal controls and procedures to prevent money laundering and terrorist financing.

Training and Risk-Based Approach Key to Compliance

The CIMA emphasizes the importance of:

  • Training employees on AML regulations
  • Implementing a risk-based approach to identify and assess risks in business relationships
  • Maintaining accurate records
  • Reporting suspicious activities to the authorities

With these new guidelines, the Cayman Islands is taking a significant step towards strengthening its financial institution compliance with AML regulations. The guidelines aim to prevent money laundering and terrorist financing while ensuring the stability of the region’s financial system.