Financial Crime World

Money Laundering Laws and Regulations in the Cayman Islands: A Comprehensive Overview

The British Overseas Territory of the Cayman Islands, located in the Caribbean, has enacted rigorous laws and regulations to combat money laundering and related financial crimes. This article provides an in-depth look into the main aspects of these regulations, including primary laws, government burden of proof, predicate offenses, extraterritorial jurisdiction, corporate criminal liability, investigating and prosecuting authorities, and penalties.

Laws Prohibiting Money Laundering

  • Proceeds of Crime Act (As Revised) (POCA): The primary legislation against money laundering in the Cayman Islands is POCA, which defines money laundering and outlines associated offenses.
  • Additional supporting laws: The Terrorism Act, Proliferation Financing (Prohibition) Act, Misuse of Drugs Act, and Anti-Corruption Act also contribute to combating money laundering and related crimes.
  • Anti-Money Laundering Regulations (As Revised): These regulations establish procedures for entities engaged in “relevant financial business” to implement anti-money laundering measures.

Proving a Criminal Violation

  • ** Criminal property:** To prove a criminal violation, the government must establish that the property in question is “criminal property,” acquired through unlawful conduct or its proceeds.
  • Standard of proof: The standard of proof is the criminal prosecution standard of “beyond reasonable doubt.”

Predicate Offenses

  • Dual-criminality approach: Money laundering offenses under POCA have a dual-criminality approach regarding predicate offenses.
  • Understanding predicate offenses: Offenses such as those set out in the Penal Code’s section 247A, including tax offenses, serve as predicate offenses for money laundering.

Extraterritorial Jurisdiction

  • No extraterritorial jurisdiction: The Cayman Islands does not have extraterritorial jurisdiction for money laundering offenses.
  • Emerging liabilities: If a Cayman Islands-established or registered entity or legal arrangement is found to have officers, employees, or agents committing money laundering offenses overseas, authorities can hold the entity or legal arrangement accountable.

Corporate Criminal Liability

  • Body corporate liability: Corporate criminal liability for money laundering offenses exists under POCA.
  • Consensual, conniving, or negligent acts: A body corporate, or a person acting in a similar capacity, can be held liable alongside individual offenders for such acts.

Authorities Responsible for Investigations and Prosecutions

  • Cayman Islands Bureau of Financial Investigations (CIBFI): This agency is the primary agency responsible for investigating money laundering offenses in the Cayman Islands.
  • Financial Crime Investigations Unit (FCIU): The Financial Crime Investigations Unit also plays a role in investigating money laundering offenses.
  • Anti-Corruption Commission: The Anti-Corruption Commission has special powers to investigate bribery and corruption crimes.

Statute of Limitations

  • Proceedings and limitation period: Money laundering offenses may be charged summarily or on indictment, but no statutory limit exists for indictable offenses.
  • Fraud and deliberate concealment: Fraud and deliberate concealment may extend limitations in cases where criminal proceedings have not been brought within six months from the date sufficient evidence became known.

Penalties for Money Laundering Offenses

  • Penalties for individual offenders: An individual offender faces fines of up to CI$5,000 (approximately US$6,100) and up to two years in prison on summary conviction. On conviction on indictment, the offender faces imprisonment for a term of 14 years and unlimited fines, or both.
  • Criminal versus civil penalties: Criminal penalties differ from civil penalties, including potential fines and asset forfeiture.

Civil Penalties and Asset Forfeiture

  • Civil remedies: The DPP may bring proceedings for forfeiture of property directly or indirectly used in unlawful conduct or intended for such use.
  • No conviction necessary: Asset forfeiture is possible through civil recovery proceedings, with no conviction necessary for the property to be deemed criminal property.

Conclusion

A deep understanding of the Cayman Islands’ regulations and their implementation is crucial for both financial institutions and individuals to ensure compliance and maintain the integrity of the financial system.