Amendments to Cayman Anti-Money Laundering Regulations (“AMLR’S”) and Anti Money Laundering (“AML”) / Countering of Terrorist Financing (“CFT”) Guidance notes following evaluations made by the Caribbean Financial Action Task Force (“CFATF”).
In February 2020, changes and updates to the AML regulations and AML/CFT guidance notes were announced following recommendations from the CFATF.
What are the main changes?
Removal of Equivalent Jurisdiction List
- Before the changes were implemented, when determining the criteria for simplified due diligence one key factor was whether the client was from a country included on the list published by the Cayman Islands Money Laundering Steering Group defining equivalent jurisdictions in terms of Anti Money Laundering standards (the “Equivalent Jurisdiction List”).
- With effect from 5th August 2020, the Equivalent Jurisdiction List will be replaced with a requirement that financial businesses should conduct an independent country risk assessment without reliance on the equivalent jurisdiction principle.
- Instead of relying on the Equivalent Jurisdiction List, financial service providers will be required to consult credible sources when assessing the risk of money laundering, terrorist financing, proliferation financing, corruption or any other criminal activity in a particular country or geographic area and any mitigating factors. These credible sources include evaluations or assessment reports published by the Financial Action Task Force, the International Monetary Fund, the World Bank, the Organisation for Economic Co-Operation and Development, the United Nations or any other competent authority or government body designated in writing by the Cayman Government.
- Dominion already carries out independent country risk assessments with a reputable global country risk rating system so it is expected that even without relying on the Equivalent Jurisdiction List, Dominion will be in full compliance of the new regulation.
Eligible Introducer Requirements
- The section in the AMLR’s dealing with eligible introducers has been amended to comply with CFATF recommendations.
- Going forward, the eligible introducer will need to list the “applicant for business” and for non-natural persons their “beneficial owners”.
- All financial service providers are required to test their introducers to ensure they hold the required Know Your Customer information. Eligible introducers shall not be relied on in cases where KYC held by the introducer is proven to be insufficient.
Sanctions, Terrorist Financing and Proliferation
- The AMLR’s have now introduced wording to ensure financial service providers have procedures for ensuring compliance with sanction obligations in the Cayman Islands, which usually extend from EU, UN and US OFAC sanctions list.
- A theme in the CFATF evaluations is the importance of procedures relating to countering terrorism financing and proliferation threats in addition to robust anti-money laundering procedures.
- Dominion already has robust procedures in place to comply with all of these considerations and will continue to ensure that these are developed and reinforced with further recommendations.
Note on beneficial ownership
It should also be noted that the Cayman regulator has decided to retain the application of a 10% minimum threshold when requiring financial services firms to establish the beneficial ownership of a structure for AML purposes, which reflects the ongoing high standards of anti-money laundering currently applied in the Cayman Islands.
How can Dominion help?
Dominion Corporate Services (Cayman) Limited is licensed with the Cayman Islands Monetary Authority to provide a full range of compliance services, including; the provision of Anti-Money Laundering Officers, such as Money Laundering Reporting Officer, Deputy Money Laundering Reporting Officer and Anti-Money Laundering Compliance Officer, preparation of policies and procedures, provision of timely legislative and regulatory updates, internal business and client risk assessments, risk-based periodic file reviews, client due diligence review and other compliance support functions, through our Companies Management Licence.
This list is not exhaustive and we also provide corporate services such as Registered Office, Directorships for companies and funds, economic substance solutions, bookkeeping and accounting, company secretary, tax reporting. We can offer additional bespoke services tailored to meet our clients’ requirements. As a firm we have an entrepreneurial approach, willing to go the extra mile and we seek unique solutions to meet the needs of our clients.
We are led by a team of qualified Accountants, Lawyers, as well as Corporate, Investment and Tax specialists. Our high level of technical expertise enables us to proactively deliver solutions whilst managing and mitigating risks and ultimately creating long-term value for our clients.
For further information or if you wish to discuss any of these changes and the services we can provide please do not hesitate to contact our team in the Cayman office: