AML Officer Insights 2025: Compliant and Confident with Cayman Islands Funds

The Cayman Islands Monetary Authority (CIMA) final quarterly investment fund statistics for 2024 confirm the Cayman Islands’ enduring appeal as a fund jurisdiction, buoyed by strong supervisory frameworks and international standards.

Registered mutual funds now dominate 97% of the regulated space, while the private funds sector has seen impressive 36% growth since the 2020 Private Funds Act. These milestones reflect a jurisdiction where effective anti-money laundering (AML), counter-financing of terrorism (CFT), and counter-proliferation financing (CPF) controls underpinning investor confidence and market integrity.

Why Robust AML Governance Matters More Than Ever

As the regulatory spotlight intensifies, especially moving through 2025, Cayman-domiciled funds must keep pace with evolving compliance obligations.

Central to meeting these expectations is the appointment of a qualified, independent AML Officer Service Provider, delivering the roles of AML Compliance Officer (AMLCO), Money Laundering Reporting Officer (MLRO), and Deputy MLRO (DMLRO).

These appointments are not merely a formality: an effective AML Officer protects your fund’s reputation, maintains regulatory approval, and gives directors the confidence to focus on performance.

DAML/Consent Regime: What Every Cayman Fund Needs to Know for 2025

Cayman’s recent overhaul to the Suspicious Activity Reporting (SAR) regime brings critical new processes which funds and their officers must urgently understand and integrate.

The Key Changes Effective from 2 January 2025 include:

Advance Consent Required
Under amendments to the Proceeds of Crime (Amendment) Act, 2023, any fund or service provider filing a SAR must now obtain explicit consent from the Financial Reporting Authority (FRA) before proceeding with any related transaction. Prior SAR filings no longer constitute an automatic defence unless consent is expressly granted.

1. Critical Steps in the DAML/Consent Request Process:
   1. Submitting a Request:
   a. Complete and submit the SAR via AMLive or secure email to the FRA, indicating it is a DAML SAR.
   b. Clearly state the reason for suspicion and what specific action consent is sought for.

2. Authority for Consent:
a. Only the Director of the FRA (or a designated official) can issue approval or refusal.

3. Notice Period & Deemed Consent:
a. A statutory notice period of seven working days starts once the DAML SAR is filed. If no response is received within this period, consent is deemed granted.

4. Refused Consent & Moratorium:
a. If consent is refused, a 30-calendar-day moratorium begins, during which the relevant activity must not be carried out.

Why This Matters:
Conducting transactions without following the new DAML consent regime risks severe regulatory breaches and potential enforcement actions. Fund directors and AML officers must ensure immediate alignment with these critical changes.

CIMA Thematic Reviews: Are Your Fund’s Records and Governance Up to Standard?

CIMA’s latest Supervisory Information Circular highlights recent thematic reviews into industry records keeping management, a common weakness across many Cayman financial entities.

Findings from the 2023-2024 Reviews:

Policy Weaknesses:

• 54% of issues existed because policies failed to address the retention and maintenance of critical records.
• 23% did not meet the minimum Statement of Guidance (SOG) – Records Management standards.
• 23% related to systems not capturing sufficient records data.

Accessibility and Maintenance Shortfalls:

• 33% of weaknesses were outdated records.
• 33% involved missing or unretained records.
• 17% pertained to illegible records, with another 17% related to records delivered past the 1–3-day turnaround requirement

Takeaway for Cayman Funds:
Polished record-keeping is now a regulatory imperative. Your AML/CFT/CPF programme must include robust policies, frequent reviews, and demonstrable adherence to CIMA’s retention and accessibility standards.

Business Risk-Based Assessment: Annual, Documented, Board-Approved

Keeping pace with CIMA’s evolving regime means every Cayman fund should annually undertake a Business Risk Based Assessment (RBA). This process must:

• Document assessment methodologies, inherent ML/TF/PF risks, effectiveness of AML/CFT/CPF controls, and overall residual risk.
• Address Cayman-specific and FATF/International guidance.
• Assess risks tied to distribution, outsourcing, sanctions, and proliferation financing.
• Be reviewed by senior management and approved by the Board annually—readiness is everything with an FATF evaluation ahead in 2027.

How JTC’s AML Officer Service Helps Your Fund Stay Ahead

JTC’s AML Officer Service offers:

• Seasoned Cayman Expertise
  Our professionals have deep regulatory knowledge and maintain active engagement with latest compliance interpretations.
• Full-Service AML Officer Coverage
  Independent fulfilment of AMLCO, MLRO and Deputy MLRO roles, keeping your operation compliant and future proofed.
• Proactive Guidance on DAML & Regulatory Changes
  We educate directors and fund staff on new processes, including DAML consent, and help update your policies and procedures in real time.
• Gap Analysis and Ongoing Support
  We benchmark your AML framework, identify shortfalls, and help implement best-in-class solutions.
• Seamless Record Management and RBA Support
  We ensure your record retention meets and exceeds CIMA and FATF standards—and help you document risk assessments that stand up to regulatory scrutiny.

Ready to Meet and Exceed Every Regulatory Expectation?

Protect your fund, your directors, and your investors. Partner with JTC and be ready for the regulatory future.

Contact us today to discover how we can safeguard your business and support your growth: AML Officer Service in the Cayman Islands