More challenges ahead for offshore sector in EU

| 25/01/2022 | 87 Comments
Cayman News Service
Premier Wayne Panton, Financial Services Minister André Ebanks and Parliamentary Secretary for FS Kathy Ebanks-Wilks

(CNS): The financial services industry in the Cayman Islands is bracing itself for another rocky year, as this jurisdiction could be included on the European Union’s list of high-risk third countries for money laundering that pose significant threats to the financial system of the Union.

The EU updated its anti-money laundering list earlier this month in line with the grey list of jurisdictions whose AML practices are under increased monitoring by the Financial Action Task Force.

Officials told CNS that the listing, which will prohibits the use of special purpose vehicles in EU AML listed high-risk third countries, was being addressed and Cayman is intent on being removed from this list. When that will happen is unclear but it will not be before the end of the year.

In a statement from the financial services ministry, officials said the Cayman Islands government was committed to working with the international standard-setter on implementing an action plan to address any outstanding issues.

In March 2019 the FATF recommended 63 actions for the Cayman Islands to complete to close gaps in its AML regime. While officials claim that 60 of these actions have been completed, the FATF nevertheless placed Cayman on its monitoring list and gave it an action plan to complete the remaining three important items.

The EU listing will impact a small amount of business here. Although Cayman remains on the FATF list, officials said this would not affect Cayman Islands investment funds from being marketed in the EU. However, if proposed AIFMD amendments are enacted in 2024 as expected, this would prevent those funds from being marketed in the EU.

The immediate EU listing will, in accordance with the EU Securitisation Regulation, prohibit EU financial institutions from using Cayman Islands entities for securitisations. But officials said that Minister André Ebanks is in direct contact with the Cayman Islands’ leading industry practitioners in this sub-sector to provide appropriate updates and guidance for the area of business that will be negatively impacted..

The listing will require all financial institutions to conduct enhanced due diligence on business relationships and transactions involving non-EU listed jurisdictions. This may include obtaining additional information on customers, beneficial owners, and the source of funds and wealth; and selecting patterns of transactions that need further examination.


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Category: Business, Financial Services, Politics

Comments (87)

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  1. Anonymous says:

    These EU countries wont come out and say it so I will say it.”The EU has declated war on low tax countries but instead of conventional weapons they are using finance as a weapon. In order to protect their high tax regimes they are intent on crippling these low tax destinations for showing up their high tax failures.When they have to send relief flights to drop us food supplies then they will be content”.
    One more thing..what makes anyone thing that the EU should be dictating anything to the rest of the world; they say they are against bullying but then proceed to bully low tax countries in an attempt to force the EU will on such countries.
    Folks they are at war with us and it’s time Mother England comes to our defense.

    • Steve says:

      The EU has every right to take steps when Cayman shell companies with no real economic activity exist solely to set up into tax dodging IP licensing agreements covering EU territories or to allow EU investors to park assets in shell companies so they can choose when to repatriate them to the EU to reduce their tax bills.

    • Martin Ian Davies says:

      I think you will find that European voters are rather keen on two things: that profits and income generated in Europe are taxed in Europe, and that steps are taken to avoid criminals being able to launder their ill gotten gains

  2. Anonymous says:

    The Local FS is in for some turbulence because there are criminal elements & dishonesty afoot. CIMA spends significant time on company registrations & fee collections, currency inflows & outflows, and banking royalties than REGULATION & ENFORCEMENT. REGULATION & ENFORCEMENT has always been CIMA’s achilles heel, as they have fail to strike a meaningful & necessary balance between this and its other, regular day-to-day activities.

  3. Anonymous says:

    …and, CIG & CIMA will continue to be quiet.
    The final 3 (of 63) FATF recommendations, until adequately fulfilled, are the same reasons the Cayman Islands can’t escape the negative FATF/OECD reviews. Instead, it’s named remain a fixture on FATF Grey List, with not much margin left to be moved to the Blacklist, if CIG & CIMA doesn’t start properly addressing the remaining three AML recommendations.

  4. Anonymous says:

    This story is exactly why we still have problems of AML/KYC. The Funds business is overregulated. These types of businesses have little or no regulation, why? I have no idea.

    https://www.marketwatch.com/story/ceo-of-miami-armored-car-company-pleads-guilty-in-140-million-dirty-gold-smuggling-scheme-11643224325?siteid=yhoof2

  5. Anonymous says:

    So when these penny stock idiots and similar get busted by the US why dont we ever prosecute too and chalk up some easy aml/poca prosecutions?

    • Anonymous says:

      CIG and CIMA encourage alot of bad behavior, when it comes to business operational rules & ethics. Rather than penalize pilferers they reward by hiding/suppressing their misdeeds and setting the Cons up for a subsequent bigger, brighter future in pilfering & gross dishonesty, especially if they are White Collar criminals. Ex. Theft from a clothing store (a blue collar crime) has far greater consequences via the justice system, than that of white collar criminals, who e.g. stole pensioners retirement funds, manipulate interest rates, orchestrate insurance fraud, falsify & forge documents, etc.
      It’s a criminal friendly society but only for the rich & well connected.

      • Anonymous says:

        9.21 I think you are getting the roles reversed. It’s in the EU countries where these frauds go on.

      • Anonymous says:

        @9.21am “It’s a criminal friendly society but only for the rich & well connected” well that excludes Caymanians then.

    • Anonymous says:

      In cross jurisdictional prosecutions, the U.S. can legally include the Cayman Islands to share in the recovery criminal proceeds BUT CIG & CIMA tell too many lies. Rather than fully cooperating they often 💯 engage in some sneaky sh!t. The local systems would rather encourage fraud and o cover it up.
      Remember: A recent CIMA written press release warnening the local Community that “it’s not business as usual” and that “these aren’t normal times.”

  6. Anonymous says:

    Here’s today’s news for Bitcoin.

    Bitcoin’s annual settlement volume has officially surpassed Visa’s.

    Thailand to regulate #Bitcoin and crypto as means of payment for goods and services

    President Vladimir Putin claims Russia has advantages in #Bitcoin mining

    Gibraltar is looking to launch the world’s first stock exchange in #bitcoin

    Five Star Bank will allow customers to buy, sell, and hold #bitcoin by the end of Q2

    Royal Bank of Canada, the country’s largest bank, appears to be running its own #Bitcoin node

  7. Anonymous says:

    There may not be bags of cash being handed to banks in Cayman, but the development of the island and the high end property sales is its equivalent.

  8. Anonymous says:

    It’s time to tell the EU to FU. We get very little business from the EU already because of Ireland and Luxembourg, it’s time to return to being a jurisdiction that facilitates international capital flows rather than one bogged down in swathes of idiotic and redundant regulations.

  9. Anonymous says:

    Stay calm. Macron is a joke and will be gone soon. Boris will be pm til 2030. Stay calm.

  10. Shucks says:

    Inevitable after Brexit. You can thank the racist provincial English with no real education for this one.

    • Hubert says:

      6:12, You can thank the lack of enforcement by your Caymanian friends who have not demonstrated enforcement for the past decade. A joke.

      Stop playing the racist victim line.

      • Anonymous says:

        Umm, given the demographics I would suggest that the lack of enforcement is by our Jamaican friends…

      • Anonymous says:

        Enforcement of these rules forced upon us by the EU.They do not have the right to force their laws on us. So no we should not enforce them on our citizens.

    • Anonymous says:

      To my Caymanian friends ‘Shucks’ is what is commonly known as a ‘Remoaner’. A Remoaner’s normal habitat is either reading Tony Blair’s memoirs or gathering with other Remoaners and wringing their hands in angst about a democratic vote that took place almost six years ago. Just got to grow up bro and let it go – you’re living in the Caribbean, in a tax haven and most likely earning far more money than you could ever earn if you were living back in the UK.

      • Remoaner and proud of it says:

        We said this would happen at the time, as the UK used to do a lot of lobbying for the BOT OFCs and after Brexit that would be lost. What the Brexitards called “Project Fear” is now “Project Reality”.

        Call me what you want, though you are way wide of the mark in your assumptions, but the truth was that the key demographics that swung the vote were those with no academic qualifications and age groups that are now largely dead.

        71% of those with a degree qualification voted remain, 69% of those with no qualifications at all voted leave. It was the thick vote that swung it. There are more remain voters alive today than leave voters too.

      • Shoot and Run says:

        Bitcoin, how Boomer! As a Gen Z but I started on crypto at high school and made more profit than I expected to earn in 20 years. I’m 100% now out as the bubble is about to blow.

    • Anonymous says:

      Oh ya. We all moved 5000 miles to an island full of Jamaicans because we are racist

  11. Anonymous says:

    Its amazing that after Cayman was added, both Turkey and Iraq were removed, for essentially promising to bring in legislation soon.

    Turkey still does not provide any tax information to other authorities.

    • Anonymous says:

      Because it has nothing to do with money laundering, all to do with destroying competing offshore financial services.

      • Anonymous says:

        Either Cayman joins the future and adopts Bitcoin, or it dies.

        • Anonymous says:

          The wealthy Millennial has entered the chat.

          • Anonymous says:

            Enforcement in the Cayman Islands is ultimately a political decision Bobo.

          • Big Bobo In West Bay says:

            And the wealthy millennial has had a painful 2 months with his cryptocurrencies.

            No doubt he is having a hard time sleeping these days.

            • Anonymous says:

              Today’s latest news your competitor Gibraltar is poised to become the first cryptocurrency hub.

              The only thing I worry about is not having enough Bitcoin.

              Enjoy your 10% inflation, $250 Trillion global debt and 15-25% global tax rates. Cayman is dying and you don’t even realise.

          • Anonymous says:

            in his 40’s actually.

            Technology doesn’t stop just because you have.

  12. Anonymous says:

    EU paper mentioned deficiencies with enforcement of AML. CIG and CIMA are quiet on this topic.

    • Anonymous says:

      Who cares? I for one do not, the EU can stick it’s AML laws and beneficial ownership registers up Macron’s posterior.

  13. Anonymous says:

    Is anyone still surprised by this? These initiatives have nothing to do with money laundering and all to do about destroying all offshore financial jurisdictions. There is no such thing as getting on a clean list, it’s a fool errand and they certainly have the right fools in charge now to give them exactly what they want.

  14. Anonymous says:

    Bless them. They look lost.

  15. Anonymous says:

    It’s time that the whole EU listing exercise be identified for what it is: Racist.

  16. Anonymous says:

    So did the EU say anything about Switzerland, Lichtenstein, or Monaco? Kinda sounds like good old colonial racism and it’s time we called them out for it.

  17. Unhappy Caymanian says:

    Welcome the financial world to Cayman Islands Magical Mystery Tour

    Where we think that just writing legislation (inadequately as well) whilst turning a blind eye to it’s enforcement or having loose regulatory interpretation will be sufficient to hold back the EU.

    This little third world island is not Paris or Berlin. Those capitals hold awesome power.

    Cayman has paid lip service to the EU, you’ve been caught once and you’re caught again.

    Cayman Financial Services will suffer from embargo.

    You get what you deserve when you can’t leave the sewer.

    The rest of the world lives very much in the 21st Century.

    Its a shame that previous and current governments can see the reality which is very much coming home to roost for Cayman.

    • Anonymous says:

      ‘Paris / Berlin – those capitals hold awesome power’. Do they really?? You should tell that to Putin! He’s laughing at them both at the moment and may be about to switch off that power!

  18. Anonymous says:

    Eternal game of cat and mouse. Our AML regime is light years ahead of other yet we are singled out…

  19. Anonymous says:

    Per EU https://data.consilium.europa.eu/doc/document/ST-5174-2022-INIT/en/pdf

    In February 2021, the Cayman Islands made a high-level political commitment to work with the FATF and Caribbean Financial Action Task Force (CFATF) to strengthen the effectiveness of its AML/CFT regime. The Cayman Islands should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) imposing adequate and effective sanctions in cases where relevant parties (including legal persons) do not file accurate, adequate and up-to-date beneficial ownership information in line with those requirements; and (2)
    demonstrating that they are prosecuting all types of money laundering cases in line with the jurisdiction’s risk profile and that such prosecutions are resulting in the application of dissuasive, effective, and proportionate sanctions. On this basis, Cayman Islands should be considered as a country having strategic deficiencies in its AML/CFT regime under Article 9 of Directive (EU) 2015/849

    • Anonymous says:

      CIG needs to urgently address point 2 “demonstrating that they are prosecuting all types of money laundering cases in line with the jurisdiction’s risk profile and that such prosecutions are resulting in the application of dissuasive, effective, and proportionate sanctions”

    • Anonymous says:

      You first have to realize that mostly the money is not actually here and never was. This makes prosecution pointless in many cases. No bank account with money in it and no human owner in the jurisdiction.

    • Anonymous says:

      “Cayman Financial Services will suffer from embargo.

      You get what you deserve when you can’t leave the sewer.” So you left your successful 1st World country to come live in the sewer. Stupid is as stupid does. Here’s your sign.Stupid

  20. Anonymous says:

    Extremely ironic, given that the amount of money laundering that goes on in Europe…

  21. Anonymous says:

    Yawn………., the EU is regulating itself into oblivion. I am sure they will quickly lose interest in this matter and go back to food labelling given the current crisis, now that a US Judge has ruled that cheese in the US can be called Gruyere even if not produced in Gruyere. Imagine the horror.

  22. anon says:

    When it comes to money laundering our weak areas in my opinion involve real estate transactions, money transfer services, and these myriad jewellery stores (Kirks excepted) that are open all the time with no customers.

  23. Anonymous says:

    better hold off on that luxurious budget…

  24. Anonymous says:

    Why do we keep pandering to the EU? How much business do we even get from the EU?

    • Anonymous says:

      Where does it say we are pandering to the EU? We are making changes to get off the FATF grey list. The EU is using the FATF listing as a rationale for being on their high risk list, which is fair enough. Pandering? How about we had actually implemented the AML regulations and controls FATF had been warning us about for years rather than Chinese fire drill at the last moment when faced with blacklisting? And how about actually prosecuting people for breaking those regulations, which is conspicuously absent? All items within our control, all sadly neglected by Cayman governments and regulators.

      As for how much EU business we get, not a huge proportion of our FS business, true, but as EU financial institutions wont be able to invest into US promoted CDOs and instruments using Cayman vehicles, that could significantly impact demand from the US for Cayman vehicles. Why use a cayman vehicle if it cuts out a significant potential customer base, when you could use a vehicle from another offshore jurisdiction that could be marketed freely to Europeans? And that my friend would be very serious indeed.

    • Unhappy Caymanian says:

      Alot.

      Also depends in which currency is being used and to what treaties any sovereign currency is beholden to.

      You don’t have to be part of the EU to find your banking is sanctioned and your company in effect goes bust.

      it s a well deserved pain in the posterior.

      Welcome to the third world again.

    • Anonymous says:

      Because we are world-class panderers.

    • Brexitator says:

      We’re at the tail end. However if we start wagging the dog we are surely going to get bitten. Globally, those jurisdictions that are in the business either get relegated to the rank of brigand or suck it up, adapt and keep on their bobo list.

    • Hubert says:

      10:41, A hell of a lot.

    • Anonymous says:

      You do realize that a large majority here are EU citizens working for EU companies?

      • Anonymous says:

        Where is “here?” You can’t be talking about Cayman – there isn’t a “large majority” of EU citizens working/living in Cayman. Caymanians aren’t EU citizens. Jamaicans aren’t EU citizens. Canadian, Americans, Indians, Filipinos aren’t EU citizens, and neither are the thousands of people living here from Central America, South America and the rest of the Caribbean.

        • Anonymous says:

          Your absolutely correct.
          The higher number of EU Citizens are or WERE mostly employed in the Tourism Industry/Sectors across the Islands.
          Pre-Brexit would have included the UK, and that would have expanded EU employment into other Industries & Sectors- e.g. Legal, Accountancy, Banking and Government.

    • Al Catraz says:

      Boris? Is that you?

  25. Anonymous says:

    Well, they’re not wrong. If we can’t honestly admit that there is a deeply-entrenched narco-trafficking industry, plus related money laundering going on, enabled through corrupt suppression, misdirection, or truce/allegiance, then none of the substantial and trailblazing efforts of the Cayman Finance industry of the last 30 years will matter much. We have two sets of game rules trying to coexist. The RCIPS needs to arrest the thick-filed, well known narco-gang kingpins, or explain why they aren’t building those cases. Their real estate and other laundering assets need to be forfeited to CIG auction. It’s so prevalent that the agencies tasked with dealing with it are nose-blind.

    • Anonymous says:

      The only money laundering going on here is in the purchase of high-end real estate and a little bit of cash running through restaurants / retail. It has almost zero to do with the investment funds and structured finance industry which is what these blacklists end up affecting.

      None of this has anything to do with “narco-gang kingpins.”

      • Anonymous says:

        When you read through the years of FATF reports, the deficiencies are nearly unchanged in relation to corruption, drug trade, money laundering, supervision, agency cooperation, and enforcement. Some of that relates and some does not relate to investment funds and structured finance…but the takeaway should be that it doesn’t matter how many hundreds of thousands of office hours of proficient AML we conduct in the Finance industry, if we also keep ignoring the local dark economy.

        • Anonymous says:

          Our FCU need night vision as they can’t see, or might have been told to lay off checking what’s happening in the shadows.

    • Curious says:

      If these activities are so well known to you then what have you done to assist the police in catching them?

      • Big Bobo In West Bay says:

        Curious, If the police don’t know about the high end real estate laundering by now they are never going to get it.

        Not as if money laundering in real estate is a big secret here.

    • Anonymous says:

      The Agencies charged with prosecuting the simple stuff like speeding and fronting and theft of pension monies are not up to the task. Why on earth would you think them able to robustly confront narco-trafficking and corruption?

    • Anonymous says:

      WTF are you talking about. If you have evidence then present it, if you don’t then STFU and go back to posting about how vaccines don’t work, how NASA faked the moon landings or who really killed JFK.

      Even if the Cayman authorities really were turning a blind eye (assuming this allegedly pervasive “narco-trafficking” isn’t for local consumption), do you really think the Feds would? Of course not.

    • Anonymous says:

      you have been watching too much Ross kemp! the only Bently’s, and Rolls Royce’s i see around Cayman are wealthy foreigners. All those Fancy Canal homes and beach front mansions are owned by these supposed Narco Kingpins? get serious because you sound very silly!

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