Financial Crime World

Cayman Islands’ Financial Institution Due Diligence Procedures Get Boost with Remote Onboarding, e-KYC Provisions

The Cayman Islands Monetary Authority has recently updated its Guidance Notes on Prevention and Detection of Money Laundering, Terrorist Financing in the Cayman Islands to incorporate electronic Know-Your-Customer (e-KYC) and remote Customer Due Diligence (CDD)/ongoing monitoring provisions.

Key Changes

Definitions

Remote Onboarding

Remote onboarding is defined as establishing new business relationships via technology solutions and non-face-to-face means where the customer is not physically present at the place where the relationship is being established.

E-KYC

E-KYC is defined as verifying a customer’s identity through electronic means.

Risk Assessment

  • Financial institutions must assess ML/TF risks in relation to their delivery channels, including remote onboarding and ongoing monitoring of business relationships.
  • Customer identification and verification methods should align with the financial institution’s risk assessment of its customers.

Policies and Procedures

  • Financial institutions must have robust documented policies and procedures in place for relying on new digital ID systems/technology solutions for CDD purposes.

CDD – For Legal Persons and Arrangements

  • When verifying corporate legal persons, regulated entities may use publicly available sources, including company registries.
  • Video conferencing and “selfie documents” can be used to onboard customers who are corporate legal persons or legal arrangements.

Simplified Due Diligence

  • Financial institutions may consider digital ID systems/e-KYC processes with lower levels of assurance to be sufficient for simplified due diligence in cases of low ML/TF risk.

Record Keeping

  • Financial institutions must ensure that records of identification data obtained through digital ID systems and e-KYC procedures are easily accessible, maintained, and can be made available to competent authorities upon request.

The Cayman Islands Monetary Authority supports the responsible adoption of remote/virtual/non-face-to-face technologies by financial institutions to assist in mitigating money laundering, terrorist financing, proliferation financing, and targeted financial sanction risks. However, financial institutions must consider the risks associated with remote onboarding and ensure that identified risks are effectively managed.