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Cayman Islands Regulatory Update

The Cayman Islands has recently seen the passing of a number of laws to improve the Island’s regulatory framework in support of the international financial system’s integrity. These laws are intended to maintain the jurisdiction’s adherence to international standards and, in particular, better align the jurisdiction with the recommendations of the Financial Action Task Force (“FATF”); the inter-governmental body that sets the standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.

This alert touches on some of the recent legal and regulatory developments in the Cayman Islands, which may be of interest to our clients.

The Proceeds of Crime Law (2017 Revision) and The Anti-Money Laundering Regulations, 2017

The Proceeds of Crime Law (2017 Revision) (the “POCL”) is the primary piece of legislation in the Cayman Islands dealing with anti-money laundering and combatting of terrorist financing (“AML”). The POCL applies to all businesses and individuals and is supported by The Anti-Money Laundering Regulations, 2017 (the “AML Regulations”), which were gazetted on 20 September 2017 and came into force on 2 October 2017.

Recent amendments to the POCL include, amongst other things, the widening of activities that fall within the definition of ‘relevant financial business’ to conform with the activities considered to be relevant financial business in accordance with international standards. In addition to the previously prescribed activities, ‘relevant financial business’ now includes: (i) “otherwise investing, administering or managing funds or money on behalf of other persons”; and (ii) underwriting and placement of life insurance and other investment related insurance”. The definition of ‘relevant financial business’ has been adopted by the AML Regulations which now infer the application of the same term, as expanded, under the principal law.

The amendments to the AML Regulations bring about significant changes to the Cayman Islands AML regime to keep it closely aligned with the FATF recommendations. The AML Regulations introduce a new risk-based approach to AML in the Cayman Islands, including enhancements for addressing high-risk situations and tougher sanctions for any breach. The practical application of the risk rating methodology for customer relationships will likely be expanded upon in the Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands (the “Guidance Notes”) which shall be updated in due course. The Guidance Notes will be of significant importance when seeking to clarify and interpret the AML Regulations and we will issue a further alert once the Guidance Notes are available.

 

To continue reading full articles in PDF format:
Cayman Islands Regulatory Update

 


Craig T. Fulton
Partner

CAYMAN ISLANDS   +1 345 814 7372


Ryan McConvey
Associate

Hong Kong   +852 2842 9580

Mobile   +852 6469 3369


Alerts

Cayman Islands Regulatory Update

20 October 2017 Craig T. Fulton Ryan McConvey

The Cayman Islands has recently seen the passing of a number of laws to improve the Island’s regulatory framework in support of the international financial system’s integrity. These laws are intended to maintain the jurisdiction’s adherence to international standards and, in particular, better align the jurisdiction with the recommendations of the Financial Action Task Force (“FATF”); the inter-governmental body that sets the standards and promotes effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.

This alert touches on some of the recent legal and regulatory developments in the Cayman Islands, which may be of interest to our clients.

The Proceeds of Crime Law (2017 Revision) and The Anti-Money Laundering Regulations, 2017

The Proceeds of Crime Law (2017 Revision) (the “POCL”) is the primary piece of legislation in the Cayman Islands dealing with anti-money laundering and combatting of terrorist financing (“AML”). The POCL applies to all businesses and individuals and is supported by The Anti-Money Laundering Regulations, 2017 (the “AML Regulations”), which were gazetted on 20 September 2017 and came into force on 2 October 2017.

Recent amendments to the POCL include, amongst other things, the widening of activities that fall within the definition of ‘relevant financial business’ to conform with the activities considered to be relevant financial business in accordance with international standards. In addition to the previously prescribed activities, ‘relevant financial business’ now includes: (i) “otherwise investing, administering or managing funds or money on behalf of other persons”; and (ii) underwriting and placement of life insurance and other investment related insurance”. The definition of ‘relevant financial business’ has been adopted by the AML Regulations which now infer the application of the same term, as expanded, under the principal law.

The amendments to the AML Regulations bring about significant changes to the Cayman Islands AML regime to keep it closely aligned with the FATF recommendations. The AML Regulations introduce a new risk-based approach to AML in the Cayman Islands, including enhancements for addressing high-risk situations and tougher sanctions for any breach. The practical application of the risk rating methodology for customer relationships will likely be expanded upon in the Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands (the “Guidance Notes”) which shall be updated in due course. The Guidance Notes will be of significant importance when seeking to clarify and interpret the AML Regulations and we will issue a further alert once the Guidance Notes are available.

 

To continue reading full articles in PDF format:
Cayman Islands Regulatory Update

 


Craig T. Fulton
Partner

CAYMAN ISLANDS   +1 345 814 7372


Ryan McConvey
Associate

Hong Kong   +852 2842 9580

Mobile   +852 6469 3369