In response to the Financial Action Task Force ("FATF") recommendations to combat money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction, there have been significant changes to the anti-money laundering laws and practices of the Cayman Islands. On 6 April 2018, the Cayman Islands Monetary Authority ("CIMA") published a Notice further clarifying the recently issued Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands ("AML Guidance Notes"). The AML Guidance Notes together with the Anti-Money Laundering Regulations (2018 Revision) ("AML Regulations"), Proceeds of Crime Law (2018 Revision) and the Terrorism Law (2018 Revision) form the revised AML regime ("Revised AML Regime").
The most significant changes under the Revised AML Regime are as follows:
· the inclusion of unregulated investment entities and structured finance vehicles within the scope of the Revised AML Regime, by bringing them within the definition of "relevant financial business";
· the new requirements for all investment funds to designate a natural person as the Compliance Officer ("AMLCO"), Money-Laundering Reporting Officer ("MLRO") and Deputy Money-Laundering Reporting Officer ("DMLRO") and to notify CIMA of the identity of such persons: on or before 30 September 2018 for existing funds; and on submission of the registration application for funds registering with CIMA on or after 1 June 2018;
· the introduction of a more comprehensive risk-based approach to anti-money laundering ("AML") processes and procedures.
CIMA intends in due course to issue both a set of FAQs and an updated version of the AML Guidance Notes for private sector consultation. These may result in some "fine tuning" of the Revised AML Regime in response to industry feedback.
It should be noted that regulations issued under the Monetary Authority Law introduce a system of administrative fines which may be levied by CIMA for non-compliance with the Revised AML Regime. In addition, the list of Schedule 3 countries which were regarded as having an equivalent regime to the Cayman Islands has been replaced by a new list of approved countries ("Approved Countries") determined by the Anti-Money Laundering Steering Group.