Global regulatory regimes are placing firms under renewed scrutiny to develop and maintain anti-money laundering (AML) protocols in order to retain, or restore credibility within wider society.
In the Cayman Islands, the focus is on the threat of money laundering, terrorist financing, and proliferation facilitation, collectively referred to as ”AML/CFT”.
To minimise the possibility of these occurring through your business activities and to ensure your Cayman Islands Fund is compliant with its legal obligations under Cayman Islands AML Regulations, a Fund must appoint the following:
- Anti-Money Laundering Compliance Officer (‘AMLCO’)
- Money Laundering Reporting Officer (‘MLRO’)
- Deputy Money Laundering Reporting Officer (‘DMLRO’).
The Cayman Islands Monetary Authority (‘CIMA’) recently attended a regulatory conference where Sarah Wheeler, Head of CIMA’s Anti-Money Laundering Division and Megan Powell, Deputy Head of CIMA’s Anti-Money Laundering Division addressed the importance of suitable policies and procedures and CIMA’s expectations regarding a Fund’s AML/CFT programme.
The following highlights the key expectations shared by CIMA at the conference, and the matter which managers and their funds should be particularly aware of to ensure the fund can demonstrate compliance:
- Evidencing Effectiveness
It is not sufficient to solely rely on written AML/CFT policies and procedures. Funds should evidence that the implemented policies and procedures are being applied accordingly and remain effective in detecting AML/ CFT.
- Self-audit and Assurance Testing
CIMA stressed that it is essential that the fund self-audit and conducts assurance testing on an ongoing basis.
- Clear AML Polices in place for Sanctions
The regulator expects very clear policies to be in place for sanctions procedures, including around reporting to the Financial Reporting Authority (‘FRA’) via the Fund’s appointed MLRO/DMLRO, and the process for freezing the assets of designated persons under financial sanctions.
- CIMA AML Thematic Reviews
CIMA regularly conducts AML/CFT inspections which may form the basis for future regulatory or enforcement actions where breaches in the Fund’s AML/CFT programme are identified. As of 2020, Cayman Law and Regulations gave CIMA the authority to impose administrative fines for non-compliance.
CIMA expects the Fund to be proactive in preventing and detecting financial crime by having a robust and compliant AML/CFT framework in place.
- Working with CIMA
Finally, CIMA highlighted the importance of working with them by appointing an AMLCO/MLRO/DMLRO, who has sufficient skills, experience, and can respond promptly to requests for information by the relevant competent authorities. Examples include working with CIMA following inspections and implementing effective remediation and reporting suspicions to the FRA.
How JTC can help
JTC, through its Cayman AML Officer Service, can partner with your Cayman Islands fund and assist in maintaining an effective AML/ CFT programme, ensuring compliance with applicable AML/CFT Legislation, Regulations, Guidance and the day-to-day operation of the Fund’s AML/CFT policies and procedures.
In light of the increase in AML-related regulatory inspections and administrative fines imposed by CIMA, if you would like to discuss how JTC’s AML Officer Service can assist with the growing burden of AML/CFT compliance, please don’t hesitate to contact Clay Dupuy, Head of AML Services. The service includes AML/CFT reviews, the appointment of experienced AML Officers, AML programme development and AML/CFT training.
About JTC in the Cayman Islands
JTC has been present in the Cayman Islands since 2013 and with an offering that includes international fund and incorporation services, as well as a wide variety of professional services to corporate and private clients around the world.
We provide a comprehensive range of services to mutual funds. Our services have been developed and expanded over many years in order to meet the needs of the offshore fund industry and this is complemented by a wealth of experience in providing premium administration services.