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Cayman Improves Technical AML Compliance Rating

Updated: Apr 9

The Cayman Islands has further improved its technical compliance with the 40 Financial Action Task Force (FATF) Recommendations relating to anti-money laundering and countering the financing of terrorism (AML/CFT).

The improvement came after the extension of two international instruments on corruption and the financing of terrorism to the Overseas Territory.

In December 2020, the United Nations Convention against Corruption was extended to the jurisdiction. It relates to the criminalisation of corruption, implementation of measures to prevent corruption, and international cooperation in matters relating to corruption.

This was followed in August 2021 by the International Convention for the Suppression of the Financing of Terrorism, which requires signatories to criminalise the financing of terrorism; to take measures to identify, detect and freeze assets related to terrorism; and to prosecute terrorism-financing offences.

Cayman already had a high technical compliance with the 40 standards, even as it was added to the FATF list of jurisdictions under increased monitoring in February 2021.

The FATF, the global standard setter for anti-money laundering, found Cayman was compliant or largely compliant with 39 of the 40 criteria at the time.

But weaknesses remained in the effectiveness of the measures and Cayman has been working with the FATF alongside other jurisdictions to address strategic deficiencies in their regimes.

The FATF highlighted that three of the 11 so-called ‘immediate outcomes’ it measures for effectiveness were insufficient under Cayman’s current AML framework.

In response, government has agreed to an action plan that will focus on applying fines and enforcement actions for AML breaches and the failure to file accurate beneficial ownership information, as well as bringing more prosecutions for all forms of money-laundering violations.

Following another upgrade by the CFATF this month, Cayman is now compliant or largely compliant with all technical criteria.

“We are very pleased to be rated compliant or largely compliant with all 40 of the FATF Recommendations,” Attorney General Samuel Bulgin said in a press release. “While we still remain under monitoring with regards to three out of the 63 areas for improvement recommended by the 2019 report (one has thus far been satisfactorily addressed, although work is ongoing), these have to do with effectiveness and are assessed separately.”

The attorney general said the extension of the two conventions to the Cayman Islands demonstrated that the jurisdiction has the appropriate legislation, structure and organisations in place to meet its international obligations with regards to AML/CFT.

IMS is one of the longest established company management firms in the Cayman Islands. IMS is licensed by the Cayman Islands Monetary Authority to provide independent directors, company management and incorporation, mutual fund administration, captive insurance and trust services. For more information about our services, please contact us.

Disclaimer: this publication does not constitute legal or professional advice and should not be relied on as such.

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