Cayman Islands Tightens Anti-Money Laundering Regulations for Investment Funds
The Cayman Islands has taken a significant step towards strengthening its reputation as a global financial hub by expanding its anti-money laundering (AML) regime to include non-registered investment funds.
New Regulations for Non-Registered Investment Funds
Effective May 31, 2018, all non-registered and unregulated investment funds will be required to comply with the same AML regulations as registered and regulated funds. This includes:
- Private equity funds
- Venture capital funds
- Real estate funds that are not registered with the Cayman Islands Monetary Authority (CIMA)
Key Requirements for Non-Registered Investment Funds
- Designate an Anti-Money Laundering Compliance Officer (AMLCO): A natural person at managerial level must be appointed to oversee the fund’s AML procedures and ensure compliance with regulations.
- Establish AML policies and procedures: Investment funds must implement risk-based customer due diligence, conduct regular transaction monitoring, and report suspicious transactions to CIMA.
- Designate Money Laundering Reporting Officer (MLRO) and Deputy Money Laundering Reporting Officer (DMLRO): These roles are essential for reporting suspicious transactions and ensuring AML compliance.
Timeline and Consequences of Non-Compliance
- Existing funds have until September 30, 2018, to designate AMLCO, MLRO, and DMLRO and notify CIMA.
- Failure to comply with the new regulations may result in administrative fines ranging from CI$5,000 (approximately US$6,000) for minor breaches to CI$1 million (US$1.22 million) for very serious breaches.
CIMA’s Commitment to AML Compliance
The revised regulations are part of CIMA’s efforts to strengthen the island’s reputation as a global financial hub and demonstrate its commitment to AML compliance. This move is expected to boost confidence in the Cayman Islands financial sector and attract more business to the island.