Financial Crime World

Cayman Islands Removed from EU’s High-Risk List for AML/CFT Purposes

The European Commission has announced that the Cayman Islands will be removed from its list of high-risk third countries with strategic deficiencies in their anti-money laundering and counter-terrorist financing (AML/CFT) regimes. This decision takes effect on February 7, 2024, when the Cayman Islands will officially be de-listed from the EU’s AML List.

Commitment to International Standards

The removal of the Cayman Islands from the EU’s AML List is a testament to its commitment to implementing international standards and its effective AML/CFT regime. The Financial Action Task Force (FATF) has also recently assessed the jurisdiction favorably, removing it from its list of high-risk countries for AML/CFT purposes. This development marks another significant recognition of the Cayman Islands as a reputable financial hub.

Implications for Financial Institutions and Market Participants

The removal of the Cayman Islands from the EU’s AML List is expected to have far-reaching implications for financial institutions and market participants. For instance:

  • Article 4 of the EU Securitisation Regulation will no longer prohibit the establishment of securitisation special purposes entities (SSPEs) in the Cayman Islands, making it a viable option for companies looking to set up such entities.
  • Existing SSPEs established in jurisdictions other than the Cayman Islands during the period of its listing on the EU AML List may continue to operate in those jurisdictions without needing to migrate. However, financial institutions and market participants may want to consider their options for establishing new SSPEs or migrating existing ones to take advantage of the Cayman Islands’ updated regulatory environment.

Reduced Due Diligence Requirements

The removal of the Cayman Islands from the EU’s AML List is also expected to reduce the number of entities required to perform enhanced due diligence on customers, clients, or beneficial owners established in or resident in the jurisdiction. Financial institutions and market participants are advised to review their existing arrangements and consider seeking professional advice on the implications of this development.

Contact Information

For further information or guidance on the removal of the Cayman Islands from the EU’s AML List, financial institutions and market participants can contact Maples Group at [email address].