Financial Crime World

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KYC Compliance Best Practices in Cayman Islands: What You Need to Know

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The Cayman Islands Gazette has published revised Guidance Notes on the Prevention and Detection of Money Laundering, Terrorist Financing, and Proliferation Financing. The updated guidelines aim to facilitate the use of electronic know-your-customer (e-KYC) and remote customer due diligence (CDD) for financial services providers.

Key Changes

The revised guidance notes incorporate changes to support the use of digital identification and e-KYC technologies. Regulated entities can now utilize virtual means of verifying client identity, provided they have robust documented policies and procedures in place.

When verifying corporate legal persons, regulated entities may use publicly available sources, including company registries.

Acceptance of Electronic Documents

CDD documents received in electronic form are acceptable, as long as the financial services provider takes a risk-based approach and has suitable documented policies and procedures to ensure authenticity.

Use of Technology for CDD Purposes

Regulated entities must have robust documented policies and procedures in place to ensure a consistent and adequate approach to relying on new digital ID system/technology solutions. This may include:

  • A tiered CDD approach
  • Secure electronic collection and retention of records
  • Anti-fraud and cybersecurity processes
  • Back-up plans
  • Regular review of the systems’ effectiveness

Risk Assessments

Regulated entities must carry out formal risk assessments of e-KYC/digital ID technologies, considering factors such as:

  • Accuracy
  • Timeliness
  • Cyber security measures

Video Conferencing and Selfies

Video conferencing is not considered face-to-face, requiring additional checks. For verification of natural persons through selfies or videos, photographs should be in color, clearly showing the person’s face, and holding the identity document.

Maintaining Accessible Records

Regulated entities must maintain accessible records, which can include digital records specifying the types of identity evidence used for specific purposes.

Seeking Assistance

If you need further guidance on your ongoing regulatory compliance obligations, please contact us. We would be delighted to assist.