Cayman Islands and the recent FATF listing
At its plenary session on 25 February 2021, the Financial Action Task Force (FATF) included the Cayman Islands as a jurisdiction being monitored for the active resolution of identified deficiencies in its regimes for the countering of anti-money laundering, terrorist financing and proliferation financing. While no significant issues were identified with the Cayman Islands compliance regimes, the Cayman Islands were given three action items aimed at demonstrating the effectiveness of its compliance regimes and therefore included on the list of jurisdictions being monitored.
The Cayman Islands has taken definitive action in recent years to update its compliance regimes to surpass changing global standards and the FATF welcomed the positive progress made by the Cayman Islands to satisfy 60 of the 63 recommended actions prescribed by the Caribbean Financial Action Task Force (CFATF). Additionally, the CFATF recently rated the Cayman Islands as compliant or largely compliant on 39 of 40 points of technical compliance with the implementation of specific FATF recommendations.
In placing the Cayman Islands under such monitoring the FATF stated that it “does not call for the application of enhanced due diligence measures” to the Cayman Islands, but members are encouraged to consider the listing in their risk analysis. As a result, both FinCEN and the EU may add the Cayman Islands to their respective advisory and AML high risk lists, which may lead to Cayman Islands structures having to provide enhanced due diligence in some circumstances. We will publish a further client update should that occur.
It is important to note that this FATF decision does not mean that any direct penalties will be imposed by EU member states on the Cayman Islands or Cayman Islands structures, and this list is not linked with the list of Non-Cooperative Jurisdictions for Tax Purposes published by the EU.
The Cayman Islands government press release can be found here.