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Legal Updates

Developments in law or practice in our jurisdictions

New AML regulations come into force

6 October 2017

The Cayman Islands government recently adopted updated Anti-Money Laundering Regulations (the AML Regulations) which came into force on 2 October 2017. The AML Regulations demonstrate Cayman’s ongoing commitment to complying with the highest international standards on combatting money laundering and terrorist financing and aim to ensure consistency with the Financial Action Task Force (FATF) 2012 recommendations, in accordance with its position as a leading international finance centre. The adoption of the AML Regulations is part of the update of the Cayman Islands anti-money laundering (AML) regime following on from the updated Proceeds of Crime Law (the PCL) which took effect earlier this year.

This alert sets out key changes under the AML Regulations.

What’s new under the AML Regulations?

The AML Regulations make the following changes to Cayman’s AML regime for anyone carrying out relevant financial business (RFB) in or from the Cayman Islands:

Are other changes expected?

Revised draft updated Guidance Notes are expected to be circulated by the Government for consultation in the next few weeks, and then finalised and adopted later this year. We will issue further client updates once the revised Guidance Notes are in effect.

Caribbean Financial Action Task Force (CFATF) evaluation

In accordance with FATF recommendations, financial institutions are expected to identify, assess and understand the AML and counter-terrorist financing (AML/CFT) risks to which they are exposed and take AML/CFT measures appropriate to those risks in order to mitigate them effectively.  

The CFATF team is scheduled to make a mutual evaluation of the Cayman Islands regulatory framework during an onsite visit in December.  As an integral element of its preparation, the Cayman Islands Monetary Authority (CIMA) is conducting a formal assessment of the AML/CFT risks present in various sectors of the financial services industry.

Those licensees affected [5] are currently being asked to complete a self-assessment relating to their specific business risks and AML/CFT controls to allow CIMA to obtain a complete and comprehensive view of each sectorial risk.  The self-assessment form is available to the relevant licensees on the REEFS portal.

Please contact your usual Harneys contact or visit www.harneys.com/Cayman if you have any questions or would like further advice on your AML obligations.
[1] Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands (Guidance Notes)
[2] the US Foreign Account Tax Compliance Act, the intergovernmental agreement between the United States and the Cayman Islands and the Cayman Islands Tax Information Authority (International Compliance) (United States) Regulations (as revised)
[3] the OECD sponsored Multilateral Competent Authority Agreement and certain bilateral agreements or tax treaties regarding the common reporting standard on automatic exchange of information the Tax Information Authority (International Tax Compliance) (Common Reporting Standard) Regulations (as revised)
[4] Argentina, Australia, Austria, Bahamas, Bahrain, Barbados, Belgium, Bermuda, Brazil, British Virgin Islands, Canada, Cyprus, Denmark, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hong Kong, Iceland, India, Ireland, Isle of Man, Israel, Italy, Japan, Jersey, Liechtenstein, Luxembourg, Malta, Netherlands, New Zealand, Norway, People’s Republic of China, Portugal, Singapore, Spain, Sweden, Switzerland, United Arab Emirates, United Kingdom, United States of America.
[5] Category A banks, Category B banks, Class A insurance companies, Class B insurance companies that carry out long-term business, mutual fund administrators, Securities Investment Business licensees, Money Services businesses, building societies and credit unions, licensed company managers and corporate services providers and licensed trust companies, restricted trust companies and registered controlled subsidiaries.