Financial Crime World

Cayman Islands Cracks Down on Financial Crime: AML, CFT, and Ethics

Upholding International Standards against Money Laundering, Terrorist Financing, and Proliferation Funding in the Cayman Islands

The Cayman Islands’ Robust Regulatory Regime against Financial Crime

Despite the idyllic image of tranquility, the Cayman Islands maintain a rigorous regulatory regime committed to combatting financial crime and preserving economic integrity. Accounting firms play a pivotal role in these efforts, serving as gatekeepers of the financial system.

Enforcing AML and CFT Laws

The Cayman Islands’ government enforces stringent Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) laws with regulations based on the:

  1. Proceeds of Crime Act (2020 Revision)
  2. Terrorism Act (2018 Revision)
  3. Proliferation Financing (Prohibition) Act
  4. The Anti-Money Laundering Regulations (2020 Revisions)

The Cayman Islands Monetary Authority (CIIPA): Role and Jurisdiction

Formed in December 2017, the Cayman Islands Monetary Authority (CIIPA) functions as the AML supervisory body for accounting firms. Its mandate includes:

  1. Registering all accounting firms
  2. Monitoring compliance
  3. Issuing guidance
  4. Implementing directives and procedures, based on Financial Action Task Force’s (FATF) 40 Recommendations

Mutual evaluation report from FATF assessment in 2017

International Partnerships

The Cayman Islands are:

  1. A founding member of the Caribbean Financial Action Task Force (CFATF)
  2. A participating member of ARIN-Carib
  3. Part of the Egmont Group, extending their reach in the global effort to combat financial crime

Understanding Financial Crime

Hidden Transactions and Gains

Financial crime is the process by which criminal proceeds are concealed, attempting to mask their true origins and ownership. The methods often mirror those of terrorists financing their operations and adding a potentially dangerous layer is proliferation financing, as it supports the production, acquisition, possession, or use of weapons of mass destruction.

Registration Requirements for Accounting Firms

Under CIIPA jurisdiction, any firm offering accounting services must register:

  1. Bookkeeping
  2. Payroll
  3. Tax advisory or tax compliance services

Firms can register through this form regardless of previous registration under the Accountants Law.

Risk Assessment from The Financial Reporting Authority (FRA)

The Financial Reporting Authority (FRA), under the Portfolio of Legal Affairs, oversees the administration and coordination of financial sanctions within the Cayman Islands. For more information on targeted financial sanctions, visit the FRA website or HM Treasury website.

Vigilance and Up-to-date Knowledge

Transparency and Accountability

To maintain transparency and accountability in the financial industry, it is essential that all professionals stay updated with the latest laws and regulations. By working together and remaining vigilant, the Cayman Islands continue to thrive as a trusted financial center dedicated to combatting financial crime.