Financial Crime World

Cayman Islands Makes Significant Strides in Combating Money Laundering and Terrorist Financing

Cayman Islands Commits to Enhancing Anti-Money Laundering Framework

The Cayman Islands has made significant progress in its efforts to combat money laundering (ML), terrorist financing (TF), and proliferation financing (PF) risks, according to a recent report. The country’s National Risk Assessment (NRA) concluded in December 2021 highlighted the need for continued improvement in the national and sectoral understanding of ML/TF/PF risks.

Key Achievements

  • Conducted targeted risk assessments at the national and sectoral level, resulting in a significant improvement in national and sectoral understanding of ML/TF/PF risks.
  • Extended the Anti-Money Laundering (AML), Combating the Financing of Terrorism (CFT), and Combating Proliferation Financing (CFP) regime to new sectors:
    • Lawyers
    • Accountants
    • Real estate agents
    • Developers
    • DPMS
    • Securities and Investment Business Act Registered Persons
    • Virtual Asset Service Providers
  • Implemented a risk-based approach to AML/CFT/CFP supervision for all regulated entities within the regime.
  • Strengthened domestic cooperation and coordination by including the Anti-Corruption Commission as a member of both the AML Supervisory Group (AMLSG) and Inter-Agency Coordination Committee (IACC).
  • Upscaled technological and human resources to enhance AML/CFT/CFP supervision, particularly for:
    • Cayman Islands Monetary Authority (CIMA)
    • Financial Reporting Authority (FRA)
    • Cayman Islands Bureau of Financial Investigations (CIBFI)
    • Office of the Director of Public Prosecutions (ODPP)

Enhancements in Financial Intelligence and Proactive Requests

The country has also seen an enhancement in financial intelligence and an increase in proactive requests and spontaneous disclosures made to overseas Financial Intelligence Units (FIUs) by the FRA.

Addressing Operational Matters with Sub-Working Groups

Several sub-working groups have been established under IACC to address operational matters related to financial intelligence, ML, TF, PF, and coordination and cooperation among supervisors.

Successful Asset Confiscations and Restraints

The Cayman Islands has also successfully confiscated assets valued at over US$10 million between 2018 and 2020, and conducted nine asset restraints in 2019 valued at over US$520 million.

Challenges and Future Directions

Despite these accomplishments, there are still human and technological resource challenges existing across agencies with critical AML/CFT/CFP mandates. The report notes that work has already commenced on several fronts, particularly for those matters that need to be accomplished within 2022.

Strategy for Safeguarding Financial Systems

The country’s strategy aims to safeguard its financial and economic systems against the abuse of criminal actors. The strategy is organized around four strategic themes:

  • Enhancing the jurisdiction’s AML/CFT legal and regulatory framework
  • Strengthening domestic cooperation and coordination
  • Upscaling technological and human resources for effective supervision
  • Improving investigative capacity and prosecution of financial crimes

Key Stakeholders Involved

Key stakeholders involved in this effort include:

  • AMLSG
  • Ministry of Financial Services & Commerce (MFSC)
  • IACC
  • Anti-Money Laundering Unit (AMLU)
  • CIMA
  • Other public sector or self-regulatory bodies charged with monitoring compliance with anti-money laundering regulations.

Conclusion

The report concludes that while progress has been made, there is still room for improvement in the country’s AML/CFT/CFP framework to align it with new and emerging risks and requirements.