Cayman Regulator Amends Rules For Registered Funds

by Phillip Morton, Investors Offshore.com

14 September 2009

Responding to recent changes to the Cayman Islands Monetary Authority’s (CIMA) Guidance Notes with regard to Prevention and Detection of Money Laundering and Terrorist Financing, law firm Conyers Dill and Pearman has advised that the amendment requires registered funds to each appoint a Compliance Officer by resolution (or other appropriate executive action) and to ensure such officer's role is clearly defined.

According to the firm, the changes mean that funds must appoint at management level a Compliance Officer and a Money Laundering Reporting Officer, who can be the same person, who:

  • should have sufficient skills and experience;
  • will report directly to the fund's governing body;
  • should have sufficient seniority and authority so that the governing body can react to and act upon any recommendations made;
  • should have regular contact with the governing body so that it is able to satisfy itself that statutory obligations are being met and that sufficiently robust measures are being taken to protect itself against the risk of money laundering and terrorist financing;
  • should have sufficient resources, including sufficient time and, where appropriate a Deputy Compliance Officer and support staff; and
  • should have unfettered access to all business lines, support departments and information necessary to appropriately perform the function.

The Guidance Notes provide that the role of the Compliance Officer is to:

  • develop and maintain systems and controls (including documented policies and procedures) in line with evolving requirements;
  • ensure regular audits of the fund’s anti-money laundering (AML) and countering the financing of terrorism (CFT) program;
  • advise the Operator of the fund of AML/CFT compliance issues that need to be brought to its attention;
  • report periodically, as appropriate, on the fund’s systems and controls; and
  • respond promptly to requests for information by the relevant authorities.

Accordingly, regulated funds may wish to consider undertaking an administrative/legal audit of their present AML/CFT program to ensure that they have appropriate systems and expertise in place to support the Compliance Officer role.

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