Cayman Islands Introduces Tough AML Requirements for Financial Institutions
The Cayman Islands has strengthened its anti-money laundering (AML) regime by introducing stringent requirements for financial institutions operating within its borders. The new regulations aim to combat money laundering, terrorist financing, and proliferation financing.
Definition of Relevant Financial Business
According to the Proceeds of Crime Act (PCA), “relevant financial business” is defined as activities such as:
- Banking or trust business carried out by a licensed institution under the Banks and Trust Companies Act
- Acceptance of deposits by a building society
- Business conducted by a co-operative society
- Insurance business and related activities
- Mutual fund administration
- Company management
Designated Non-Financial Businesses and Professions (DNFBPs)
Certain DNFBPs, including:
- Law firms
- Accounting firms
- Real estate dealers
are subject to specific requirements. They must comply with guidelines issued by the Department of Commerce & Investment, Cayman Islands Attorney Regulation Authority, and Cayman Island Legal Practitioners Association.
AML/ CFT/CPF Procedures
Financial institutions are required to maintain strict AML/ CFT/CPF procedures, including:
- Customer identification and verification
- Risk-based approach to identify and assess money laundering and terrorist financing risks
- Record keeping and internal controls
- Designation of an Anti-Money Laundering Compliance Officer
- Reporting of suspicious activity
Sector-Specific Guidance
The Cayman Islands has introduced specific AML compliance requirements for different types of institutions, including:
- Banks
- Fiduciary institutions
- Insurance businesses
- Mutual funds
- Money services businesses
- Securities investment businesses
- Virtual asset service providers
DNFBPs must also comply with sector-specific guidance issued by their applicable regulators.
No Regulatory Requirements for Gambling
Gambling in the Cayman Islands is illegal, and as such, there are no regulatory requirements beyond its prohibition.
Commitment to Combating Financial Crimes
The new regulations demonstrate the Cayman Islands’ commitment to combating financial crimes and maintaining a strong AML regime. Financial institutions operating within the jurisdiction would do well to familiarize themselves with these strict requirements to avoid non-compliance penalties.