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Financial Sanctions in the Cayman Islands: A Comprehensive Guide

The Cayman Islands has been at the forefront of implementing financial sanctions to combat terrorism, proliferation, and other international threats. In this article, we will delve into the various types of financial sanctions, their implementation, and the key government departments and agencies involved in enforcing them.

Types of Financial Sanctions

Financial sanctions come in many forms, developed in response to a given situation. The most common types are:

  • Targeted Asset Freezes: Apply to named individuals, entities, and bodies, restricting access to funds and economic resources.
  • Restrictions on Financial Markets and Services: Can apply to named individuals, entities, and bodies, specified groups or entire sectors.

Implementation of Financial Sanctions

The Cayman Islands implements financial sanctions through various orders and regulations. For UNSCR 1267 and EU Regulations 881/2002 and 753/2011, the Afghanistan (United Nations Measures) (Overseas Territories) Order 2012 and the Isil (Da’esh) and Al-Qaida (Sanctions) (Overseas Territories) Order 2016 are applicable. For UNSCRs 1718 and 2231 and EU Regulations 2017/1509 and 267/2012, the Democratic People’s Republic of Korea (Sanctions) (Overseas Territories) Order 2012 and the Iran (Sanctions) (Overseas Territories) Order 2016 are applicable.

Delegation of the Governor’s Functions to the Financial Reporting Authority

Effective November 15, 2017, the Governor of the Cayman Islands delegated the function of receiving reports to the Financial Reporting Authority (FRA). The FRA is responsible for coordinating the implementation of financial sanctions and receives and analyzes Suspicious Activity Reports (SARs).

Key Government Departments and Agencies Involved in Sanctions

The following government departments and agencies are involved in enforcing financial sanctions:

  • UK Foreign & Commonwealth Office: Negotiates all international sanctions for the Cayman Islands.
  • The Governor: Cayman Islands competent authority for implementing financial sanctions (with certain functions delegated to the FRA).
  • Anti-Money Laundering Steering Group (AMLSG): Oversees anti-money laundering, counter-terrorism financing, and counter-proliferation financing policy in the Cayman Islands.
  • Inter-Agency Co-ordination Committee (IACC): Responsible for implementing AMLSG policies, inter-agency cooperation, and coordination with respect to AML, CFT, and CFP.
  • Supervisory Authorities: Regulate relevant institutions, businesses, and professions, including the Cayman Islands Monetary Authority (CIMA), Department of Commerce and Investment (DCI), Cayman Attorneys Regulation Authority (CARA), and Cayman Islands Institute of Professional Accountants (CIIPA).
  • Financial Reporting Authority (FRA): Coordinates the implementation of financial sanctions and receives and analyzes SARs.
  • Customs and Border Control (CBC): Implements trade sanctions and embargoes, travel bans, and controls shipment at border.
  • Financial Crime Unit: Investigates breaches of financial sanctions and pursues civil penalties.
  • Proliferation Inter-Agency Group (PIAG): Ensures coordination and cooperation in the area of PF and helps equip relevant institutions, businesses, and professions to better understand and mitigate PF risk.

Conclusion

The Cayman Islands has a robust system in place for implementing financial sanctions to combat terrorism, proliferation, and other international threats. The government departments and agencies involved work together to ensure effective enforcement of these sanctions, protecting the financial system and preventing illicit activities.