CAYMAN ISLANDS: New anti-money laundering plan under way.


As published on caymancompass.com, Monday 18th March, 2019.




Government has responded to what appears to be a damning evaluation of the effectiveness of Cayman’s anti-money laundering framework by launching an action plan that aims to address any deficiencies within a year.


The Caribbean Financial Action Task Force, the regional affiliate of the global standard-setting body in anti-money laundering, still has not published its latest mutual evaluation report of the Cayman Islands. However, the Cayman Islands government received the findings several months ago.


“It’s not going to be a good report,” Premier Alden McLaughlin told the Compass last month. “It is going to find that we have some areas we need to improve on our anti-money laundering and counter-terrorist financing systems.”


On Monday, the premier said his government was addressing the recommendations in the report “as a matter of priority”.


The premier announced the appointment of a dedicated task force, made up of several government agencies, to oversee the implementation of a “comprehensive action plan.”


“Our anti-money laundering and counter financial terrorism action plan will send a clear signal that we intend to maintain those standards,” he said.


“We are confident that all of the concerns identified in the CFATF report will be remedied within the one-year time frame,” McLaughlin said. “Work is already under way to improve information gathering, more rigorously monitor financial activity and enhance enforcement, including the confiscation of assets.”


According to a government information sheet, the actions required by the CFATF report include that information on the directors of Cayman companies and limited liability companies should be publicly available. In addition, government should introduce provisions that will allow the General Registry to share information with other competent authorities.


Meanwhile, fines for failure to maintain accurate beneficial ownership registers should be increased.


The fact that partnerships are not subject to Cayman’s beneficial ownership regime is incompatible with the evaluation report’s requirements, and competent authorities should have the power to access beneficial ownership information for partnerships, the CFATF said.


More information should be collected on excluded persons under the Securities Investment Business Law, who must also implement appropriate anti-money laundering policies, procedures and controls.


Cayman must revise its Trust Law to empower the Cayman Islands Monetary Authority to request information from any trust constituted under Cayman law, and require trustees to maintain accurate information on the settlors, protectors and beneficiaries of a trust. In this context, the CFATF was also concerned about the potential misuse of trusts that are administered by foreign trustees or non-professional trustees, given that ordinary and exempted trusts do not have to use regulated and supervised Cayman-based service providers.


Given the risks identified by the national risk assessment, the CFATF further said that Cayman should appoint an anti-money laundering supervisory authority for lawyers and real estate developers.


A ministerial sub-committee of Cabinet, which is chaired by Premier McLaughlin and includes the attorney general, the deputy governor, and the ministers for financial services, commerce and finance, will coordinate the implementation of the plan and lead the work to enhance Cayman’s anti-money laundering and counter-terrorism financing framework.


Several initiatives have already started, the government said in a press release.


For instance, professional associations and supervisory bodies, such as the Cayman Islands Monetary Authority, the Department of Commerce and Investment, the Cayman Islands Institute of Professional Accountants and the Cayman Islands Legal Practitioners Association, are closing important supervisory gaps identified by the CFATF report.


The Office of the Director of Public Prosecutions is heading a new focus group to enhance the use of financial intelligence and the investigation and prosecution of financial crimes.


And the Ministry of Financial Services is leading a risk assessment of legal persons and arrangements, concentrating on those who own and take advantage of capital and assets, and those who exercise effective control of legal arrangements.


In addition, lawyers will be subject to wider supervision once the Legal Associations Law has come into effect. Other critical amendments to legislation have either been made or are in progress, the press release said.


In response to a lack of complex police investigations noted by the CFATF report, the government said the Royal Cayman Islands Police Service is in the process of enhancing its financial crimes unit with greater focus on money laundering and terrorist financing investigations.


In consultation with the Governor’s Office, the RCIPS is partnering with the Economic Crime Unit of the City of London Police, to deliver a training programme that will further develop local expertise. The Economic Crime Unit will advise on the processes and procedures of the new task force, with a long-term goal of seconding personnel to the local police service.


In addition, the local police service has engaged with the U.K.’s National Crime Agency, to arrange for the secondment of personnel to conduct an overall strategic crime threat and risk assessment for the Cayman Islands. This assessment will include an analysis of risk in the financial sector, the government said. Governor Martyn Roper noted his office will remain closely engaged with this process.


“I am particularly pleased that we were able to secure strategic and advisory assistance from both the City of London Police and the National Crime Agency to guide the law enforcement initiatives. This underlines the U.K.’s commitment and support for the Cayman Islands,” Governor Roper said.


The Cayman Islands will implement the recommendations of the CFATF report during a 12-month observation period, following which the FATF’s International Cooperation Review Group will issue another report.


Attorney General Samuel Bulgin said the regional organisation acknowledged that Cayman’s anti-money laundering regime “is complemented by a well-developed legal and institutional framework” and that Cayman has “a high level of commitment” to ensure that the framework is robust.


“We believe that this strong foundation, in tandem with a jurisdiction-wide, joined-up approach, will allow us to address the recommendations in a timely manner,” Bulgin said.


Government and financial industry representatives took pains to present the CFATF’s findings as business as usual.


“For decades, we have worked with stakeholders across the public sector and industry to successfully keep pace with regulatory changes, while remaining attractive to legitimate business activity,” Premier McLaughlin said.


Financial Services Minister Tara Rivers added the history of financial services in Cayman showed that government and the private sector are “able to meet changing global standards while maintaining our standing atop the international financial services market”.


Cayman Finance, the organisation that represents the financial services sector, emphasised that the industry’s readiness to consistently adopt the highest global standards had helped build Cayman into a premier global financial hub.


Cayman Finance CEO Jude Scott said, “As such we welcome independent assessments by leading international authorities like CFATF,” as well as government’s commitment to addressing the findings.

“A likewise committed private sector, working alongside and through Cayman Finance, will help to ensure that the Cayman Islands is able to exit the International Cooperation Review Group process at the earliest opportunity afforded to us,” he said.

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