Cayman Islands Adopts Global Standards for Know Your Customer (KYC) Procedures
The Cayman Islands has implemented updates to its Anti-Money Laundering Regulations (AMLRs) and AML/CFT Guidance Notes in response to recommendations from the Caribbean Financial Action Task Force (CFATF). The changes aim to strengthen the island’s anti-money laundering (AML) and countering of terrorist financing (CFT) regulations.
Key Changes
- The “Equivalent Jurisdiction List” has been removed, requiring financial services providers to assess each country’s risk of money laundering and terrorist financing.
- New requirements for identifying and verifying beneficial owners of legal persons at a threshold of 10% have been introduced. This change aligns with global standards and may require Cayman Islands fund administrators to update their procedures.
- Eligible introducers must provide KYC confirmations listing the applicant and their beneficial owners, and financial services providers are required to periodically test introducers to ensure they maintain accurate KYC information.
Targeted Financial Sanctions Obligations
The AMLRs now include specific reference to targeted financial sanctions obligations. This requires Cayman Islands financial institutions to have procedures in place to identify assets subject to applicable sanctions.
Emphasis on Countering Terrorist and Proliferation Financing Risks
The updates emphasize the importance of countering terrorist and proliferation financing risks, in addition to AML concerns.
Guidance for Compliance
To support compliance with these new requirements, CIMA has issued updated guidance on:
- Assessing risk
- Applying a risk-based approach
- Counter proliferation financing
- Targeted financial sanctions
- Ongoing monitoring
- Virtual asset service providers
Recommendations for Cayman Islands Fund Administrators
Experts advise that Cayman Islands fund administrators should review their procedures to ensure compliance with the updated regulations and guidance.