Maples files JR over CIMA’s new rules

| 13/05/2021 | 96 Comments
Ugland House, home of Maples in Grand Cayman

(CNS): One of Cayman’s largest financial services and legal firms has filed an application for judicial review challenging how the Cayman Islands Monetary Authority (CIMA) is interpreting and applying certain provisions of the new Anti-Money Laundering Regulations that were implemented last year. The Maples Group said it is turning to the courts to determine how financial service providers should be following the new rules after the regulator failed to address its concerns through the private complaints procedure.

Maples did not spell out the exact detail of the case in a press release announcing the decision, and the application has not yet been filed on the judicial services public register. However, they said the review will focus on CIMA’s decision to impose obligations on MaplesFS Limited and Maples Corporate Services Limited that are not required under the AMLRs and in any event are disproportionate in the context of the particular services that these two entities provide.

The firm said it was fully supportive of the new initiatives to protect and enhance the integrity of the financial services industry here but there was a need for clarification on the relevant points of law.

“The Maples Group’s position is that CIMA has changed its approach to the application of certain provisions of the AMLRs without providing prior notice, consulting with industry stakeholders or issuing updated guidance notes,” executives from the offshore firm said in a releases. “Obtaining the court’s ruling is therefore crucial to ensure that all financial service providers in the jurisdiction understand the standards to comply with the AMLRs, and that these standards are uniformly adhered to by all industry stakeholders.”

Maples added that if CIMA’s interpretation of rules prevails, this would be contrary to the risk-based approach to client due diligence set out clearly in the AMLRs, and the internationally recognised standards upon which the AMLRs are based. The JR will provide certainty and benefit the regulated community within the Cayman Islands and their clients, the firm said.


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Category: Business, Financial Services, Local News

Comments (96)

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  1. Hancock says:

    Where was CIMA when Finsbury Bank, Guardian Bank and First Cayman Bank went into liquidation. Why were fines not imposed on these banks and the directors including an eminent politician.

    • Anonymous says:

      HSBC!

    • Hubert says:

      As long as we are a colony of the United Kingdom, we have no choice but to follow OECD guidelines.

      If we want to work outside of those guidelines, we should become an independent state.

      The choice is ours to make.

      • Anonymous says:

        As I understand it CIMA’s interpretation of these AML laws goes way beyond anything the UK or OECD wants from us and way beyond what the law actually says! It’s not the law the JR is challenging it’s CIMA’s understanding of it. Every law firm and RO is praying Maples wins! CIMA is shooting Cayman in the foot.

      • Big Bobo In West Bay says:

        Always amazed how 3 islands who are part of the United Kingdom, think they can work completely outside of the rest of the developed world’s financial system.

        If the OECD decided to stop our correspondent banking, we would be finished and have no choice but to immediately adopt the USD as our currency.

        We had better be careful how we play this game or we could kill the golden goose very fast.

  2. Anonymous says:

    Certain law firms, who have flagship headquarters in the Cayman Islands, need to be held accountable for years of doing transactional business with unlicensed foreign lawyers practicing Cayman Islands law, which is a criminal defense.

    The profits generated from such unlawful-unlicensed practice of Cayman law that, after being deposited into bank account, taint the formal monetary system the proceeds of crime, which stems from illegal practice of Cayman law is something that cannot be ignored.

    This has been one of the biggest AML threats, which has been ignored as if it does not exist. It seems that powerful, wealthy law firms received the benefit of connivance by successive governments and the AG, who seems to support these firms over and above Caymanian attorneys (especially sole practitioner and small law firms).

    This issue will be addressed and justice shall be brought to this situation.

    • Anonymous says:

      File an STR. It won’t go far, rightly.

    • Anonymous says:

      Prosecute the partners of Offshore Magic Circle law firms, who have allowed this to happen for decades with full knowledge and who reaped the financial reward.

      I bet you criminal prosecutions and disbarment will do the trick just fine. Criminals need to go to jail.

      Also those in government and public officials, who have supported large law firms criminality, should be prosecuted too. Perhaps private prosecutions may be best, because the DPP’s office cannot be expected to do its job.

  3. Anonymous says:

    CIMA answer to (and listen to) no-one.

    Where is the counter balance? The appeals process? The arbitration? The outside independent objective oversight of CIMA. No-where. …..UNLESS you go to court – and only a law firm can afford that – and Volia!

    CIMA are effectively cop, prosecutor, judge, jury and executioner (all in one).

    Who is watching/regulating the watcher/regulator?

  4. Anonymous says:

    Maples will not win. The Govt answers to the OECD not to a bunch of grossly overpaid lawyers.

    • Anonymous says:

      Maples will lose.

      • Anonymous says:

        Let’s hope the courts understand that they need to follow the rule of law. As plenty of people commenting here certainly don’t.

    • Anonymous says:

      The case is merely for them to save face and act as if they really believed a very convenient interpretation.

    • Anonymous says:

      Govt really has no choice. They have to answer to the OECD or we will be royally screwed financially by the rest of the developed world.

    • Anonymous says:

      My money’s on Maples. They would not have started this without a truckload of evidence and a strong legal argument.

  5. TopaZ says:

    I support Maples 100% and all one has to do is look at the government org chart and see who this AML regulation enforcement is under and to speak frankly those in charge coming who come from Blacklisted jurisdictions can not advise Cayman best nor is it in our best interests either . The recent legal upheavals should concern every Caymanian in the financial industry.The mere fact that Maples and several others who have been here from this financial industries inception in Cayman and have help draft some of these very laws and regulations are taking stance against this should be applauded and given our full support as they would and should I how best to how to interpret CIMA imposed regulations .

    • Anonymous says:

      Maples and Walkers have been given far too much power to influence governmental decisions, as well as far too much latitude in enforcement of laws against the big firms.

      The Cartel firms now need to be reigned in from running a muck, because they are the biggest threat to the AML regime.

      It’s not the Caymanian attorneys, who act as sole practitioners and in small law firms, that are causing all the concerns on AML issues. It’s the big firms (and affiliated service providers) that where all the trouble lies.

  6. Anonymous says:

    Are we talking about the same industry?..there are a lot of references to livestock and farmers.

    • Plain talk. says:

      The true point in all a this hubalu is simple, when the country is faced with external inspections of the country’s AML regime the respondents are unsuited to provide proper clarification and therefore all comments received are accepted without adequate evaluation of the circumstances. Suffice it to say that while CIMA is now heavily staffed, there is unfortunately a lack of seasoned and experienced oractitioners within who understand the intricacies of processes a d therefore will acquicese to the inspectors. This is a fact a d will only be remedied when the face off on external inspections is on an even level.Furthermore incapable and poor interpretation of the Regs will be evidenced in the judicial review.

      • Anonymous says:

        I had 10 years experience and applied for a position there….the rather rude interviewer understood nothing about the industry and gave absolutely no credit for industry knowledge.

  7. Anonymous says:

    I think CIMA and government want Cayman to have a non existent Financial Services sector like the members of the Caribbean Financial Action Task Force. Really why are we taking advice and guidance from these places.
    Could it be the majority of constituents need loans from their old colonial masters?

    • Anonymous says:

      They can freeze financial assets of Cayman entities….withhold on remittances…we are their bitches.

      • Anonymous says:

        Don’t forget cancel correspondent banking accounts (without which this island has no access to US dollars). We really are at their mercy

        • Orrie Merren says:

          I do agree that it’s important correspondent banking is important to the Cayman Islands, which is vital for our economic sustainability and commercial functionality.

          • Chris Johnson says:

            I agree Orrie look what happened to Belize. They had huge problems with correspondent banking. But knowing the banks there that comes as no surprise.

  8. Anonymous says:

    Once CIMA and Government get through with Financial services their will be no business left to regulate.
    Regulated out of existence by bureaucrats.

    • Anonymous says:

      That sounds like if they make you comply with rules you can’t do it….same thing we hear from you about immigration.

  9. Anonymous says:

    CIMA is completely out of control. You can get dinged on guidance that are not rules or laws. However in their interpretation if you have not done enough to address something where no criteria exists other then their feeling.
    It’s insane!

    • Anonymous says:

      That’s not quite true, it is common practice in OECD nations to expect compliance with the regulators handbook and guidance. There is no difference here.

      Maples is taking the same approach it did with Economic Substance, idiotic fiddling over minutiae detail and missing the bigger picture. The Cayman Govt / CIMA answer to the OECD, not to the equity partners of Maples.

    • Anonymous says:

      No different from the mess CILPA and CARA have made.

  10. Anonymous says:

    Wait..wasn’t Wayne Panton CIMA Chairman when this went down?

  11. Anonymous says:

    Really pleased to see Maples taking action. CIMA has been using the inspections process to make up new rules (or come up with new ‘interpretations’) for too long. There is a clear process for changes to the AMLRs and the Guidance Notes and it involves full consultation. CIMAs current approach is an attempt to impose new standards by an unapproved back door. If CIMA wants to start enforcing like a grown up regulator, then it needs to grow up and start acting in line with the rules applicable to it as a public body.

  12. Anonymous says:

    When you can’t operate with an incredibly lenient CIMA…you are in the wrong jurisdiction….move operations to Panama or Delaware!

    • Anonymous says:

      Idiot.

      Good people are going to loose their jobs as Taliban-esque interpretation of rules, SOG’s, policies etc. by CIMA are rushed out to appease the international bodies, who will always believe we are a Tax Haven, no matter what.

      Goose and Golden Egg comes to mind.

      • Anonymous says:

        “lose”….idiot

      • Anonymous says:

        Well the chicken has come home to roost now ..the world is telling us to apply the rules and not just the most convenient interpretation we’ve used in the past. They will always see us a tax haven and money launderer as we still are…we use silly rationale such as “tax neutrality” and “structure efficiency” which truly only applies to approximately 0.00001% of the Cayman money flows that it’s used to legitimize.

  13. Orrie Merren says:

    It seems as if the fox has been guarding the henhouse. 🤦🏼

  14. Anonymous says:

    CIMA needed this reality check.

    Whilst there are EXCELLENT individuals in the various departments, the size of the CIMA super structure and how it engages with the international Financial Sector is completely asymmetrical. They have the time (its their only job) and they have the money.

    They are today, omnipotent.

    CIMA has unlimited (government/tax payers) resources (they hire when, who and how they want) and whilst they “consult” they do not listen to industry.

    But again, there are some fantastic individuals within……

    • Anonymous says:

      All they’ve done in the past is listen to self interested industry leaders and go through the motions….the world is saying enough is enough…apply the rules.

      • Anonymous says:

        You say “the world is saying enough is enough”. Emphasis being on the word “world”. How many countries in the world are not obliged to comply with standards and that’s just fine. Why aren’t the rules applied to every Country in the world? How can “the world” criticize when they are exempt from compliance issues?

        • Anonymous says:

          No one is saying the world is fair but our government has for years easily yielded to every outrageous and inequitable demand of the country biased international regulators. Mac, Alden, and their crews didn’t know they should resist as they knew nothing about the industry. Industry supported this as it created additional services such as country sign-offs or additional company regulatory d&o positions. BUT now, after years of a unqualified and weak regulator, industry is outraged by their demand for compliance. The loudest complaints seem to be coming from those who grew exponentially in recent years…their success being from little on boarding checks and the advantage of not requiring compliance resources. These companies have tarnished this countries reputations for too long and it’s time they were brought to an even playing field that other firms with the only disadvantage seeming to be integrity.

  15. Anonymous says:

    Maples versus the AG in court – sounds like a fair fight – NOT. Guess CIMA will bring in a London QC for that one.

    • Anonymous says:

      AG already has a fight on his hands.

      • Anonymous says:

        Yeah, the AG is exposed big time. There’s no way that the AG is going to survive and keep his job. It’s time for the AG to go.

    • Anonymous says:

      I don’t think AG represents CIMA as CIMA has its own lawyers (I stand to be corrected if I’m wrong)

  16. Anonymous says:

    …then there are bank compliance departments just making up their own rules as they go, or farming out to non-Caymanian officers…with non-applicable personal data flying through email postcards…

    • Anonymous says:

      what are you talking about…

      non-Caymanian officers – and your point is?

      • Anonymous says:

        Think the poster is talking about firms outsourcing compliance functions off island? Which is becoming more common to cut costs… alot of compliance admin work is done in other jurisdictions. Cost of doing business in Cayman continues to rise.

        • Anonymous says:

          Practicing unlicensed Cayman law in foreign jurisdictions illegally has seemed to the norm.

          Perhaps large law firms (and service providers) can continue those illegal business practices, which have been very profitable for decades.

          It seems that when the big boys are held to account the world comes tumbling down. If there are no criminal prosecutions, them consider yourselves lucky.

    • Anonymous says:

      Lol that’s because CIMA gives the Banks bogus findings that are not tied to regulations or laws/acts and force the Banks to follow their “interpretation”.
      Get rid of Cindy. It’s a joke at this point. The type of findings they are issuing is absurd and the inspectors are embarassing to talk to, including Head of Banking. Too much politics hindering CIMA from being successful and respected. And it starts at the top.

      • Orrie Merren says:

        What about CILPA and CARA? Please do justify the disproportionality.

        • Anonymous says:

          Don’t forget the DCI who now regulates sellers of bangles amongst other things – they are totally clueless

          • Anonymous says:

            The DCI doesn’t regulate crap. When was the last time you saw a prosecution for fronting?

            • Anonymous says:

              What about illegally trading without a Trade and Business licence, which (in certain instances) also breaches the Local Companies (Control) Act, because non-Caymanians sometimes operate companies doing business blatantly outside the parameters of the law, but very little of the time are they criminally charged.

        • Anonymous says:

          You listening to Sammy again?

  17. Anonymous says:

    Hopefully the government listen, the law firms and accounting firms drive the economy in cayman and earn them the most revenue, seconded by import duty, and by the tourist sector in a distant third

    • Anonymous says:

      Actually tourism revenue is a distant 23rd.

    • RES IPSA LOQUITUR says:

      The tail cannot wag the dog.
      Rules are rules that must be followed by all licensees. The failure to do so means the blacklisting of the Cayman Islands is warranted by international bodies including OECD and all the others.

      • Anonymous says:

        Agreed but when CIMA reads the legislation one way and everyone else reads it another it’s very dirt to ensure compliance

        • Anonymous says:

          How can you follow the rules when CIMA changes them without telling anyone. They also have no understanding of what they are reviewing/auditing – they need to educate their analysts before they can become truly effective!

        • Anonymous says:

          CILPA/CARA and the AG seem to be incapable of reading, understanding and applying the Anti-Money Laundering Regulations.

          Apparently according to CILPA, CARA and the AG, the AMLRs being used unlawfully is the norm. So, what is Maples fussing about.

          Apparently they can dish out unlawful AML functions on the legal profession (through CILPA and CARA), but now are up in arms about CIMA’s interpretation and application of AMLRs.

      • Anonymous says:

        Most of the staff are expats… they will just go back to their home countries.

      • Anonymous says:

        The issue is that CIMA cites people for issues that are in the laws OR in the regs! They send a whole list of “requirements” by email that cant be traced to anything. Just someone’s whim that day.

        • Anonymous says:

          Laws and regs are both enforceable so CIMA can enforce requirements related to them. Is there a Not missing in your post or do you not know how laws and regulations work?

      • Hubert says:

        As long as we are a colony of the United Kingdom, we have no choice but to follow OECD guidelines.

        If we want to work outside of those guidelines, we should become an independent state.

        The choice is ours to make.

    • Anonymous says:

      ….and that import duty is driven by building of offices, homes, importing of vehicles for Financial Sector employees, equipment used by businesses etc….. The construction industry depends on the FS industry.

      Lock-down /Covid has proved it – we can make do without cruise ships and US$75 spend tourists – but it is the Financial Services Sector (also driving the construction industry) that keeps the whole show on the road……

      How many of the MPs (other than Wayne, Andre and Roy) can spell “Hub” (as in “financial hub)? yet it is those others who have/will squander the money from the FS………

      • Anonymous says:

        What about the financial subsidy that the CIG granted to CILPA, which, it appears, CARA is using to carry out ultra vires functions under the AMLRs on law firms and lawyers? Is this not use of government funds for an unlawful purpose? Shouldn’t the Auditor General and the PAC not investigate?

    • Anonymous says:

      Government revenue isnt everything. Its about how money is distributed among society that matters as well. Tourism spreads money to ordinary people much more than the handful of super rich lawyers.

    • Orrie Merren says:

      Generally, I do agree. However, the medical cannabis industry (inclusive of domestic cultivation and cannabinoid extraction, as well as research and development, and lawful export to authorized parties in other jurisdictions), which is 100% owned and controlled, is now poised to be one of the next pillars of economic sustainability in the Cayman Islands. And, most importantly, these are positive human rights and fundamental freedoms, which are protected by our Bill of Rights (enshrined in our Constitution).

  18. Anonymous says:

    Good on Maples – perhaps CIMA may be forced to listen now as they have been running roughshod over the AMLRs with their own interpretation of the requirements, which in many instance is clearly wrong
    Also the SoGs have become mandatory and all that entaila, whereas the SoGs clearly say they aren’t intended to be prescriptive
    CIMA criticizes firms for not implementing a RBA whereas CIMA clearly doesn’t implement one itself and treats all licensees and RPs the same regardless of their business, which many times CIMA patently doesn’t fully understand

  19. Anonymous says:

    The only firm on island that has the power to say somthing.

    Somthing needs to be done with the stupidness that comes out of CIMA!

    • Anonymous says:

      Intertrust now being fined KYD4.2m …

      This is CIMA trying to dig itself out of the hole it’s created for itself by sitting on its thumbs for too long

      CIMA needs to realise it has to work with the industry, not destroy it

      There’s the old saying that says turkey don’t vote for Christmas, but CIMA it seems does

      Hope CIMA staff like waiting on tables, as at this rate there won’t be a financial services industry left to regulate

      • Anonymous says:

        Going for those perceived to have the deepest pockets.

        I’ve been banging on about the dangers to the industry of unwarranted/disproportionate fines since the admin fines regime was introduced, and the ante was upped when CFATF said the only way off the monitoring list was to fine/prosecute.

        I’ve dealt with only one CIMA inspection in my time, and one was enough. Box ticking and a refusal to consider the type of business being conducted and how the rules sensibly applied to that type of business.

        Sad thing is we have all seen this coming.

        Good luck to Maples, Intertrust, and whoever else is in the firing line.

        • Orrie Merren says:

          What about Caymanian attorneys, who are feeling the wrath, that are victims of an unlawful, unconditional and ultra vires AML regime?

        • Anonymous says:

          Box ticking is right. The irony of CIMA doing these industry sessions explaining risk based approaches and industry outreach only for them to tick boxes and write frivolous findings to licensees.
          They need their own house in order. Sure, licensees can improve etc, but some of the findings I have seen and heard of are completely ridiculous, contradicting to the Law and straight up rookie examiner findings. They flexing muscles to prove a point, but going about it in the wrong way.

          Try talking to some of the inspection people, they have no clue about industry, yet are charged to regulate industry.
          I agree there should be an effective fining regime in place and I agree that enforcement should happen, but CIMA isn’t really known for common sense… they are known for ticking boxes. Tick tick tick.

          • Anonymous says:

            CIMA with its draconian approach is responsible for closing down the smaller firms. Frequently they delegate inspection teams to the accounting firms that are staffed with newbies who have no experience. The same newbies miss all the Madoff situations that have occurred and cost investors their life savings. Arising from this are a multiple of lawsuits against the audit firms. This has driven up professional indemnity insurance by a incredible amount and made it difficult for smalle fry in the financial industry to obtain insurance.

            Because CIMA has insufficient staff they pay the audit firms and that includes an element of profit.

            Maybe it is time for CIMA to fine these firms for being incompetent.

      • Anonymous says:

        Most are expats anyway and will just go back to their home countries.

      • Anonymous says:

        Well, thats going to be awkward for a former Intertrust Head of Compliance now CIMA Director.

    • Anonymous says:

      LOL you said the word ‘power’. Too much for too many years. What to expect from government’s attorneys.

  20. Anonymous says:

    Well done Maples – about time someone actually “checks” CIMA!

    • Anonymous says:

      What about CILPA/CARA getting checked? Seems that this issues gets swept under the rug.

      • Anonymous says:

        So true. CILPA and CARA are destroying the public’s faith, trust and confidence in the legal profession in the Cayman Islands and, quiet notably, seem to use the AML regime monitoring, which is operated through a self-regulatory body (controlled by the large law firms), to act as a shield of protection for the large law firms, who have skeletons in their closets, and as a tool of oppression against Caymanian attorneys (especially sole practitioners and small law firms).

  21. Anonymous says:

    Clarification: Announce the JR as a last attempt to spur the CIMA to act before it gets really stink in court. Fair play.

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