Financial Crime World

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Combating the Financing of Terrorism in Cayman Islands: A Mixed Bag

The Financial Action Task Force (FATF) has released its latest assessment on Cayman Islands’ efforts to combat the financing of terrorism, revealing a mixed bag of results.

Technical Compliance

According to the report, Cayman Islands has made significant progress in implementing the technical requirements of the FATF Recommendations, earning a “largely compliant” rating. This reflects its progress in:

  • Implementing necessary laws, regulations, and procedures to prevent terrorist financing
  • Establishing a robust supervisory framework for financial institutions, including banks, securities dealers, and insurance companies

Effectiveness

However, when it comes to effectiveness, the picture is less rosy. The country’s measures have been rated as only “moderate level of effectiveness”, with some areas falling short of expectations. The assessment was based on 11 immediate outcomes that represent key goals an effective anti-money laundering and combating the financing of terrorism (AML/CFT) system should achieve.

Shortcomings

Cayman Islands fell short in several areas, including:

  • Preventing the misuse of its financial system for terrorist financing purposes
  • Lack of transparency and accountability in the country’s AML/CFT regime

Recommendations

The FATF report highlights several areas where Cayman Islands needs to improve, including:

  • Strengthening its customer due diligence requirements
  • Enhancing its surveillance and monitoring capabilities
  • Improving cooperation with foreign authorities

Response

In response to the findings, Cayman Islands has committed to implementing a number of measures aimed at addressing the identified shortcomings. These include:

  • Strengthening its AML/CFT regulations
  • Increasing transparency in its financial sector
  • Enhancing international cooperation

Accessing the Full Report

The full report can be accessed on the FATF website.

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