Cayman Islands Tells FATF All Anti-Money Laundering Criteria Met

Caymannetnews

09 October 2000

This story is reproduced by kind permission of Caymannetnews at http://www.caymannetnews.com

The Government of the Cayman Islands today released details of its report to the Financial Action Task Force (FATF) on Money Laundering, which has conducted a preliminary review of corrective measures of "non-cooperative" jurisdictions announced in June.

Based on its June 2000 review, FATF stated that the primary 'deficiencies' of the Cayman Islands anti-money laundering regime involved customer identification, internal reporting and record keeping. All of these areas, in addition to related issues, have been addressed since that time. Legislative action has been taken to ensure that many of the guidelines, which existed previously as guidelines within a "Code of Practice," have since become legal requirements.

"We have worked diligently over the past few months to ensure that the regulations and laws of this jurisdiction meet or exceed both the 40 FATF recommendations and the 25 criteria adopted by the FATF in February 2000," said the Honourable Financial Secretary, Mr. George McCarthy. "We are in full compliance with these standards, and it was our hope that the FATF would report publicly on its review, and then take prompt actions to remove us from the list of 'non-cooperative' jurisdictions. We look forward to hearing about the 'de-listing' procedure and timetable from FATF."

The Cayman Islands began passing laws relating to money laundering and other financial crimes in 1984, and has continually amended them to keep pace with international standards. In addition, a Code of Practice with comprehensive guidelines for the financial services industry was published in March 2000.

"We have been recognized by the U.S. and other countries as leaders in the Caribbean region for our anti-money laundering efforts, and the legislation passed in July and September reflects our continuing commitment to the fight against money laundering," added Mr. McCarthy.

The main areas of concern raised by the FATF, and legislative actions taken by the Cayman Islands, are outlined below with details of actions undertaken to address them:

Customer Identification & Record-keeping Rules: The Cayman Islands has compulsory legal requirements, with respect to relevant financial business, for customer identification, internal reporting and record-keeping in the Money Laundering Regulations 2000, which contain criminal sanctions. These regulations were passed on August 7, 2000 and took effect on September 1, 2000.

Regulatory Cooperation: The Cayman Islands Monetary Authority has been enabled by the Monetary Authority (Amendment) (International Co-operation) Law 2000 to readily access and share information with overseas regulators, including information regarding the identity of customers in appropriate regulatory circumstances. This law was passed on July 14, 2000, and took effect on July 24, 2000.

The Role of the Regulatory Authorities: The Cayman Islands Monetary Authority has reviewed its resources and has adopted a strategy for enhanced on-site inspections of licensees within a finite period.

Suspicious Activity Reporting: A new criminal offence was added on July 14, 2000 by the Proceeds of Criminal Conduct Law (Amendment) (Money Laundering Regulations) Law 2000, making it a crime punishable by up to two years imprisonment to fail in the course of business to report any suspicious transaction. This exceeds UK Law, which has such an offence only in relation to drugs and terrorism. In addition, the Money Laundering Regulations require by law that financial services providers have systems in place to secure the reporting of suspicious transactions, punishable on a breach by up to two years imprisonment.

Companies Management: All classes of management companies are subject to Money Laundering Regulations 2000, and are therefore part of the anti-money laundering regime. The Money Laundering Regulations adopted in the Cayman Islands are identical to those of the UK, but their scope is wider due to the broader definition of relevant financial business.

Additional Points: In addition, on September 18, 2000, the Legislative Assembly passed legislation regulating money transmitters, and transferring the regulation of building societies and credit unions from the Registrar of Companies to the Cayman Islands Monetary Authority.

"As one of the major international financial centres, we take our anti-money laundering regime very seriously," said Mr. McCarthy. "There is no reason to penalize the Cayman Islands by keeping us on a list of "non-cooperative" countries when our recognized track record on anti-money laundering efforts, as well as the recent legislative actions, do not warrant this continued classification."

The Cayman Islands, a United Kingdom Overseas Territory, is one of the ten largest financial centres. Forty-three of the world's top 50 banks have licensed subsidiaries or branches here. The financial services sector includes banking, mutual funds, insurance, company management, vessel registration, structured finance and the Cayman Islands Stock Exchange.

Laws of the Cayman Islands related to financial services regulation:

Monetary Authority Law (2000 Revision)
Proceeds of Criminal Conduct Law (2000 Revision)
Money Laundering Regulations 2000
Companies Management Law (2000 Revision)
Banks and Trust Companies Law (2000 Revision)

In June 2000, the Cayman Islands made an 'advance commitment' to the Organisation for Economic Cooperation and Development (OECD), and the jurisdiction did not appear on the OECD's list of 'harmful tax havens,' published on June 26, 2000.

The FATF's summary report of June 22, 2000, included a positive report on the history of the Cayman Islands, stating, "it has been a leader in developing anti-money laundering programs throughout the Caribbean region. It has served as president of the CFATF, and it has provided substantial assistance to neighboring states in the region.

"It has demonstrated exemplary cooperation on law enforcement matters, and uncovered several serious cases of fraud and money laundering otherwise unknown to authorities in FATF member states. In addition, it has closed several financial institutions on the basis of concerns about money laundering."

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