Cayman And The US Exchange Fraud Proceeds

by Mike Godfrey, for LawAndTax-News.com, Washington

31 May 2005

At a Washington meeting last week, the Cayman Islands and the US Department of Justice exchanged cash garnered from two fraud cases, under Cayman's Mutual Legal Assistance Treaty with the US.

Cayman Islands Chief Justice Anthony Smellie and Attorney General Samuel Bulgin met with US Attorney General Alberto R. Gonzales and other officials at the U.S. Department of Justice to exchange funds stemming from the asset-sharing agreement under the Treaty.

The Cayman delegation received just over US$1.7 million, the result of the successful prosecution of the two fraud cases. For the second case, the Cayman Islands in return presented the US government with U.S.$675,000, to be used as restitution for the victims of that fraud, which was been successfully prosecuted and the proceeds confiscated.

“Our relationship with the U.S. and our moral obligations as a member of the global community to assist in the efforts to combat the scourge of organised crime and money laundering are of the highest importance to the Cayman Islands,” said Chief Justice Smellie. He also expressed Cayman’s appreciation to several members of the Office of International Affairs and commended the strong working relationship that has developed between the two governments.

Attorney General Bulgin made the following remarks. “The occasion here today is indeed a reaffirmation of the long history of cooperation between the US and the Cayman Islands – with able guidance from the UK– in the fight against criminal activities. It is an unequivocal pledge of the Cayman Islands to continue to cooperate with other countries, including the US, in not only prosecuting the perpetrators, but in confiscating their proceeds of crime.”

Since the MLAT’s introduction in 1990, in excess of US$10 million, arising from some 230 cases in which the two governments have cooperated, has been shared with the Cayman Islands. Several million dollars have also been returned to the United States for the restitution of victims of fraud and other cases.

The Cayman Islands has an agreement with the US to share any proceeds from cases in which the two governments cooperated which are not to be returned, for various reasons, to victims, shareholders or creditors. The MLAT encourages use of funds for local drug rehabilitation, law enforcement and justice administration programmes.

The Cayman Islands was the first regionally, and among the first worldwide, to criminalise the laundering of the proceeds of all serious crimes, extending such legislation beyond the ambit of drug-money laundering. The legislation gives the courts of the Cayman Islands power to restrain and ultimately to forfeit the proceeds of drug trafficking and all other serious crime, including fraud and official corruption.

In 2003, the Cayman Islands passed a comprehensive piece of anti-terrorism legislation in addition to adopting, as part of its domestic law, United Nations Security Council resolutions dealing with the financing of terrorism.

The Cayman Islands Government has been continuously working both domestically and internationally to maintain a strong regulatory and compliance framework. Domestically, this includes adherence to the FATF international anti-money laundering standards and the Basel Committee, IOSCO and IAIS global standards in the regulation of financial services and updates to governing legislation.

Internationally, this includes bilateral mutual co-operation arrangements such as the mutual legal assistance treaty with the US and various regulatory co-operation arrangements maintained by the Cayman Islands Monetary Authority.

The Monetary Authority Law (2003 Revision) vests CIMA with powers to make licensing, supervisory and enforcement decisions, and to co-operate with international regulatory authorities.

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