Financial Crime World

Title: “Cayman Islands Strengthens Anti-Money Laundering Measures: Key Findings from the Mutual Evaluation Report”

Background

The Cayman Islands, a major international financial center, is renowned for its advanced financial sector. In March 2019, the jurisdiction underwent an assessment by the Financial Action Task Force (FATF) through a Mutual Evaluation Report. This article provides a summary of the key findings from the report, focusing on the Cayman Islands’ strengths and areas for improvement in its Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regime.

Key Findings

Committed to a Robust Framework

The Cayman Islands demonstrates a commitment to having a robust AML/CTF framework, which is complemented by a well-developed legal and institutional framework:

  • Legislative Framework: The jurisdiction has implemented legislation to counter money laundering and terrorist financing.
  • Regulatory Framework: The regulatory framework is being enhanced to address new risks.

Assessment of ML/TF Risks

The jurisdiction has identified and assessed aspects of its ML/TF risks. However, a more comprehensive assessment is required due to the significant size of the Cayman Islands in the financial sector:

  • Assessment Scope: The scope of the assessment included a review of the strategic analysis of ML/TF risks.
  • Risk Assessment: The ML/TF risks relate mainly to the financial sector, primarily banking and company service providers.

Cooperation and Coordination

There is a structure in place for cooperation and coordination, including the Inter Agency Coordination Committee (IACC) and the Anti-Money Laundering Steering Group (AMLSG). However, improvements are needed for international cooperation and integration of law enforcement organizations:

  • Current Status: The Cayman Islands has signed mutual legal assistance agreements with various countries.
  • Areas for Improvement: The jurisdiction should improve communication and cooperation with foreign counterparts.

Investigation and Prosecution

There is a focus on investigation and prosecution of ML at both the investigative and prosecutorial levels. However, resources and tools are needed to effectively identify cases and pursue complex, international investigations:

  • Current Status: The Financial Reporting Authority (FRA) plays a key role in the investigation process.
  • Areas for Improvement: The Cayman Islands should provide the FRA with the necessary tools and resources to effectively assist investigative authorities.

Information Sharing and Collection

The Cayman Islands has not yet provided the Financial Reporting Authority (FRA) with the tools it needs to support proactive identification of cases nor has it collected relevant information from reporting entities:

  • Current Status: Reporting entities are required to report suspicious transactions to the FRA.
  • Areas for Improvement: The jurisdiction should implement a more comprehensive and proactive approach to collecting and utilizing information from reporting entities.

Challenges and Next Steps

Amidst these findings, the Cayman Islands faces challenges in enhancing its AML/CTF framework. Strengthening the areas below will be crucial to the jurisdiction in continuing to maintain a robust financial center:

  1. Improve risk assessment and analysis, particularly of international components of risks.
  2. Increase communication of risks to relevant stakeholders.
  3. Build stronger partnerships with foreign counterparts to foster cooperation in AML/CTF matters.

By addressing these challenges, the Cayman Islands can further solidify its position as a reputable and compliant international financial center.