Cayman Islands Financial Institutions Must Comply with Russia Sanctions Regime

Background on Financial Sanctions

Financial sanctions are restrictions imposed by international bodies such as the United Nations, European Union, or United Kingdom to achieve specific foreign policy or national security objectives. These sanctions aim to:

• Change the conduct of listed countries, regimes, or persons
• Impose punitive measures when international peace and security are threatened
• Signal disapproval
• Protect misappropriated assets
• Deter terrorist acts
• Suppress nuclear proliferation

Guidance from the Financial Reporting Authority (FRA)

The FRA has issued guidance for relevant institutions, businesses, and professions in the Cayman Islands to assist them in fulfilling their obligations under financial sanctions laws. The “Financial Sanctions Guidance” covers licensing and compliance issues.

Key Obligations for Law Firms

• Implement procedures to ensure compliance with financial sanctions obligations applicable in the territory
• Subscribe to the FRA’s sanction alerts automatic email notification system
• Stay up to date with their sanctions obligations by regularly checking the FRA’s list of sanctions targets by regime in force in the Cayman Islands

Compliance with the UK Government’s Russia Sanctions Regime

Cayman Islands financial institutions must take steps to ensure they are not facilitating transactions involving individuals designated under this regime, which includes those on the UK Sanctions List.

Importance of Sanctions Compliance

Failure to comply with financial sanctions obligations can result in serious legal consequences, including fines and reputational damage. Law firms in the Cayman Islands are advised to review their sanctions compliance procedures and ensure that they are adequately equipped to detect and prevent financial transactions involving designated persons or entities.