Financial Crime World

Here is the rewritten article in Markdown format:

Compliance Procedures for Financial Institutions in Cayman Islands Take Center Stage

As the deadline approaches for financial institutions in the Cayman Islands to complete their due diligence procedures on existing account holders, it’s crucial to remember critical reminders from the Cayman Islands Tax Information Authority (Cayman Islands TIA) and the Organisation for Economic Co-operation and Development (OECD).

Impact of Potential Change in KYC/AML Rules

The change in the Cayman Islands Anti-Money Laundering Regulations may reduce the threshold for a controlling person by ownership from 25% to 10%. This is reinforced by the recent OECD CRS FAQ Update, which requires financial institutions to follow domestic law requirements.

This may require Cayman Islands financial institutions to:

  • Request updated Self-Certification Forms from passive non-financial entities (NFEs)
  • Record all appropriate controlling persons

CRS Policies and Procedures

As a reminder, Cayman Islands law requires financial institutions to have written CRS policies and procedures in place. These policies should:

  • Identify each jurisdiction where an account holder or controlling person is considered tax resident
  • Apply due diligence procedures
  • Retain information according to the CRS

KPMG comments: While there was no requirement for FATCA, the need for CRS policies and procedures is a new development for many Cayman Islands financial institutions.

We can assist in developing these policies and procedures to ensure compliance with Cayman Islands TIA requirements. Contact us for further details.

Liquidating Financial Institutions

Liquidating financial institutions are reminded that their reporting obligations remain effective until the date of liquidation. The Cayman Islands Guidance Notes clarify that reporting should be completed for:

  • The prior year
  • The period up to the point of winding down

Liquidators or equivalents must ensure these obligations are met and arrangements are made to comply with record-keeping requirements for six years.

Timing of Self-Certification Form Collection and Validation

The revised Version 2.1 CRS Guidance Notes indicate that Cayman Reporting Financial Institutions (CFIs) must:

  • Obtain self-certification forms as part of account opening procedures
  • Validate the self-certification within a 90-day period if it has not been validated

AEOI Timeline

Have questions?

KPMG in the Cayman Islands has an Automatic Exchange of Information (AEOI) Help Desk for any queries. Contact us here.