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Revised Guidance Notes on Prevention and Detection of Money Laundering and Terrorist Financing Published in Cayman Islands
The Cayman Islands Government has published revised guidance notes on the prevention and detection of money laundering, terrorist financing, and proliferation financing in the Cayman Islands. The revised guidance notes came into effect on August 30, 2023, and incorporate changes to facilitate the use of electronic know-your-customer (e-KYC) and remote customer due diligence (CDD)/ongoing monitoring.
Key Changes
- Support for FATF-issued guidance on digital identification
- Remote onboarding of clients and use of e-KYC and digital ID technologies on an ongoing basis, where appropriate based on the risk assessment of clients
- Build on earlier advisory issued by CIMA in 2020 during COVID-19
- Subject of a Cayman Island Monetary Authority (CIMA) private sector consultation paper in December 2022
Robust Policies and Procedures Required
Regulated entities should have robust documented policies and procedures in place to ensure a consistent and adequate approach to relying on new digital ID system/technology solutions for customer due diligence purposes. This may include:
- Tiered CDD approaches
- Secure electronic collection and retention of records
- Anti-fraud and cybersecurity processes
- Backup plans
- Risk indicators
Risk Assessment of e-KYC/Digital ID Technologies
Regulated entities will also need to carry out a formal risk assessment of e-KYC/digital ID technologies, which should include documented consideration of:
- How the proposed system works
- The level of assurance it provides
- Any particular risks associated with it
The revised guidance notes provide that customer identification and verification procedures that rely 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 for Verifying Natural Persons
The revisions also address video conferencing and selfies for verifying natural persons, requiring:
- Clear scanned copies or photographs of identity documents and constitutional documents
- Regulated entities to maintain accessible records and ensure that they have access to or have a process for enabling authorities to obtain the underlying identity information and evidence needed for identification and verification
Conclusion
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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