Financial Crime World

Cayman Islands Money Laundering Laws: Understanding Defenses and Penalties

The Cayman Islands has implemented stringent money laundering laws to combat financial crimes. While money laundering offenses are serious in nature, understanding the defenses available can be crucial for individuals or entities facing charges.

Codified Defenses

In relation to the substantive offenses of money laundering under sections 133, 134, and 135 of the Proceeds of Crime (2024 Revision), there are several defences provided. These include:

  • Acts done in relation to the enforcement of the law
  • Belief that criminal conduct occurred outside the Islands and was not unlawful at that time

There is also a defense for professional legal advisers regarding legal privilege, but this does not apply if the information or other matter is given with the intention of furthering a criminal purpose. Additionally:

  • There is a defense if the property was acquired or used or in the possession of the individual for adequate consideration

Amendments

The Proceeds of Crime (Amendment) Act 2023 has recently been passed, amending the defences to the offenses of concealing, arrangements, and acquisition, use, and possession related to money laundering. The amendment introduces a new requirement that a person must have the consent of the Financial Reporting Authority (FRA) to commit an act.

Outcomes in Criminal Money Laundering Cases

In Cayman Islands criminal money laundering cases:

  • There is no provision for plea agreements or settlement agreements
  • The prosecution will apply a two-part test to decide whether to lay charges: the evidential test and the public interest test
  • A conviction can result in up to 14 years’ imprisonment and/or an unlimited fine

Asset Forfeiture and Confiscation

The Proceeds of Crime (2024 Revision) provides for confiscation, which may be made after a conviction. The court has the power to go beyond the proceeds of the particular crime if it is established that the defendant has a criminal lifestyle.

Restraint Orders

A restraint order may be granted under section 45 of Part III of the Proceeds of Crime (2024 Revision) if there is a criminal investigation or proceedings started and reasonable cause to believe the alleged offender has benefited from their criminal conduct.

Civil Recovery and Compensation

The Director of Public Prosecutions may apply for civil recovery under POCA, which allows for property obtained through unlawful conduct to be forfeited in civil proceedings. Compensation orders are also available under section 33 of the Penal Code (2024 Revision).

Limitation Periods

There is no time limit within which a charge must be brought for money laundering offenses triable either way.

Extraterritorial Reach

The Cayman Islands’ money laundering laws have extraterritorial reach, applying to:

  • Companies incorporated within the jurisdiction
  • Conduct that occurs in or outside of the jurisdiction
  • Citizens, non-citizens, and non-residents where there is sufficient nexus to the Cayman Islands

In conclusion, understanding the defenses available under Cayman Islands money laundering laws is crucial for individuals or entities facing charges. It is essential to seek legal advice from experienced professionals to navigate the complex legal landscape and ensure a fair outcome in criminal proceedings.