CIFSA Highlights Strength Of Cayman AML Regime

by Amanda Banks, Tax-News.com, London

25 February 2008

The Cayman Islands Financial Services Association (CIFSA) has expressed concern that despite the efforts of Cayman’s service providers and those of the Regulatory Authority, "there remains the failure of certain international financial centres to recognise the Cayman Islands’ Anti Money Laundering (AML) regime".

CIFSA, the body which aims to promote the jurisdiction as a quality international financial services centre, was referring to a recent article in the Cayman Observer newspaper, which reported that efforts to gain a competitive edge in jurisdictions such as Bermuda, Dubai and Dublin have resulted in difficulties attracting outsourced funds business from the Cayman Islands.

Without the recognition of Cayman’s AML regime, service providers are required to complete an additional due diligence process, providing an extra regulatory hurdle, when Cayman administrators are outsourcing administrative work to counterparts in other jurisdictions, CIFSA noted.

“This situation is difficult to understand given that Cayman’s AML framework is among the strongest in the world and is more robust than many onshore countries. When the AML regulations were introduced internationally they were universally to be applied retroactively."

"Unlike the US and the UK, who considered the exercise not to be too costly, the Cayman Islands complied and undertook the ‘know your customer’ exercise throughout the industry at considerable expense to the service providers” observed Eduardo Silva, chairman of CIFSA.

Jurisdictions such as Jersey, meanwhile, which have recognised Cayman’s AML framework as equivalent to their own, have seen business grow between the two countries, and this is expected to further increase, according to CIFSA, with Cayman’s market leading position in the hedge funds sector.

“The confidence expressed in Cayman’s customer identification procedures by the jurisdictions that have recognised its equivalency, has resulted in a saving of time and resources for the parties involved and will help bring through more funds business”, added Mr Silva.

Jersey’s recognition of Cayman’s AML regime means that the jurisdiction considers Cayman’s framework to be equivalent to its own and the other countries on its list, which includes all the major developed European nations, as well as the US, Gibraltar, Guernsey, the Isle of Man, Japan and Singapore.

“The Cayman Islands is still the only Caribbean jurisdiction that Jersey considers to be equivalent in terms of AML legislation,” Silva stated, suggesting that this is testament to the strength of the regime in the Cayman Islands.

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