Financial Crime World

Title: Cayman Islands and the Scrutiny Over Financial Crime and Terrorist Financing

The Cayman Islands, a British Overseas Territory famous for its tax-friendly business environment and luxury resorts in the Caribbean, are under increasing international scrutiny for allegations of financial crime and terrorism financing. Let’s explore the legal measures taken by the Cayman Islands to combat these issues.

Terrorism (United Nations Measures) (Overseas Territories) Order, 2001

  • Established the legal infrastructure for implementing measures against terrorism financing imposed by the UN Security Council.
  • Criminalized the provision or collection, directly or indirectly, of funds for terrorism.

Terrorism Act, 2002

  • Expanded the jurisdiction’s powers to investigate, prevent, and prosecute acts of terrorism.
  • Applicable to acts of terrorism within the Cayman Islands and abroad.

Cracks in the Armor: Criticisms and Concerns

Despite these legislative efforts, doubts have been raised regarding the effectiveness and commitment of the Cayman Islands in combating financial crimes.

FATF Evaluations

  • 2014 FATF Evaluation: Criticized deficiencies in the anti-money laundering and counter-terrorist financing framework.
  • 2021 FATF Mutual Evaluation Report: Found progress but identified areas requiring improvement, such as beneficial ownership, risk assessments, and supervision.

EU ‘Tax Haven Blacklist’

  • Included in the European Union’s list of non-cooperative jurisdictions for tax purposes.
  • Classification impacts reputation and potential economic implications for the territory.
  • The Cayman Islands dispute the classification and are currently appealing the decision.

The Way Forward

  • Acknowledgment for continuous improvements and commitment to addressing concerns.
  • Enhancing transparency, strengthening oversight, and intensifying international cooperation.
  • Sustained efforts to build robust, effective, and credible measures to combat financial crimes and terrorism financing within the Cayman Islands.