KYC Procedures in Cayman Islands Get E-Boost: New Guidance Notes Emerge
The Cayman Islands has recently published revised guidance notes on the prevention and detection of money laundering, terrorist financing, and proliferation financing. The move aims to facilitate the use of electronic Know Your Customer (e-KYC) and remote customer due diligence/ongoing monitoring procedures.
Changes Support Digital Identification and Remote Onboarding
As part of the update, the Monetary Authority of the Cayman Islands (CIMA) has introduced changes that support the use of digital identification and provide for remote onboarding of clients. This follows a private sector consultation paper issued by CIMA in December 2022 and builds on an earlier advisory suggesting regulated entities could utilize virtual means to verify client identity.
Key Changes
- Financial service providers (FSPs) may now use publicly available sources, including company registries, to verify corporate legal entities.
- FSPs can accept government-issued identification received in electronic form provided they have suitable policies and procedures in place to ensure the authenticity of the document.
Assessing Digital ID Systems
The new guidelines emphasize the need for FSPs to assess the suitability of digital ID system/technology solutions for customer due diligence purposes. To rely on these systems, FSPs must have robust policies and procedures in place, including:
- A tiered CDD approach
- Secure electronic collection and retention of records
- Anti-fraud and cybersecurity measures
- Back-up plans
- Regular reviews of the system’s effectiveness
Risk Assessments
Risk assessments are also crucial for e-KYC/digital ID technologies. The revised guidance notes suggest that customer identification and verification procedures relying on reliable independent e-KYC/digital ID systems with appropriate risk mitigation measures in place may present a standard level of risk.
Video Conferencing and Selfies
The guidelines also address video conferencing and selfies, stating that:
- Video conferencing is not considered face-to-face and additional checks are required.
- For natural persons, photographs or videos should clearly show the person’s face, holding an identity document to demonstrate it belongs to the customer.
Maintaining Accessible Records
Regulated entities must maintain accessible records, with the Consultation Feedback emphasizing the need for FSPs to ensure they have access to or can obtain the underlying identity information and evidence needed for identification and verification.
Conclusion
The revised guidance notes are expected to facilitate greater use of e-KYC and digital ID technologies in the Cayman Islands, reducing regulatory compliance burdens while enhancing anti-money laundering and counter-terrorism financing efforts.