Leading law firm in dispute with CIG over BO rules

| 22/03/2022 | 78 Comments
Walkers, Grand Cayman

(CNS): Walkers is suing the Ministry of Financial Services and the Registrar of Companies over information that law firms must provide on their clients to the authorities under the Companies Act. Walkers, one of the biggest law firms in the Cayman Islands catering to the offshore financial sector, filed a consent order on Friday to prevent the government from continuing or starting any action regarding more requests for information or fines under the law where identification has expired, against the backdrop of a full lawsuit filed last month.

In February, Walkers filed a suit asking the courts for a declaration that, on the proper construction of the relevant legislation, “the expiry or renewal from time to time of a passport, driver’s licence or other government-issued document for any ‘registrable person’ is not a ‘relevant change’ within the meaning of that section”.

The firm is seeking to prevent it from being fined over documents that are filed but have expired and have not yet been renewed, as they argue it is not a material change.

In the legal action, Walkers states that on 14 January it received over 500 separate letters from the registrar for its clients requesting information under the “relevant change” section of the Companies Act because the identification documents for these “registrable” people had expired.

The officials demanded details of correspondence with each person in respect of the expired IDs and any restriction notice issued in consequence and threatened administrative fines of CI$5,000 in the absence of a response within a stipulated time frame.

But the lawyers argue that the expiry or renewal from time to time of a passport, driver’s licence or other government-issued document is not a “relevant change” for the purposes of law and does not make the details of these registered individuals “materially incorrect or incomplete”, and that the registrar should not impose a fine until at least six months after they become aware of a breach.

The need for firms in the financial industry to supply the information arises out of the pressure Cayman has experienced from the Financial Action Task Force because of deficiencies in the country’s anti-money laundering regime. The Cayman Islands is required to have effective sanctions in cases where owners or their service providers don’t file up-to-date and truthful beneficial ownership information.

See the consent order and lawsuit on the Judicial Services public register
Cause No: FSD0025 of 2022.

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Category: Business, Financial Services

Comments (78)

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  1. Anonymous says:

    there really is a lack of talent all over CIMA/CIG

    On the subject of KYC / AML, and following Walkers logic – does that mean we need to provide certified copies of our utility bills every 3 months too?

  2. Crab Claw says:

    Personally, I’m tired of institutions telling me on the island that my uncancelled expired Cayman Islands Passport can’t be used as a valid ID because they have been informed so by CIMA, I’m glad someone is seeing them over this travesty.

  3. Anonymous says:

    Here is an example of a CIMA conversation.

    CIMA – We don’t think your are follow X regulation.

    Service Provider- we have this process X to address that regulation.

    CIMA – we don’t think that is enough to address the regulation.

    SP- okay, can you tell us what you would like to see and we can correct this deficiency.

    CIMA – no, we don’t know what you can do. All we think that is what your are doing is not enough.

    SP – Okay, well that makes no sense and not helpful.

    CIMA – not our problem. Would you like to pay your fine buy cash or credit?

  4. JTB says:

    CIMA will not be satisfied until Cayman has no financial services industry left at all.

    A joke organisation run by incompetent, clueless, ignorant, stupid jokers.

    • Anonymous says:

      From the top down! Term limits for thr MD of CIMA. Rotate her out. What is her succession plan? Yet they hand out findings for inadequate succession planning for licensees.

      Free Cindy! Let her be free. Let her fly right away. Save them all from poor leadership.

      • Johann Moxam says:

        As a Director, I am happy to opine and try to correct your comment given my current working relationship with MD Scotland from an informed position.

        After over two decades of dedicated service to CIMA, it is clear that the MD is not the source problem or should be made a scapegoat for your dissatisfactions or comments etc.

        Please read the article and note that the pending legal matter does not involve CIMA or the MD.

        All the best.

        Johann Moxam

    • Johann Moxam says:

      Please read the article again. This pending legal matter does not involve CIMA.

      I accept everyone is entitled to their personal views but understanding the facts is important for proper discourse or exchange of views.

      Johann Moxam

      • CSF says:

        You are correct that this specific legal action has nothing to do with CIMA and you are entitled to point that out.

        However, you are (deliberately?) not looking at the bigger picture: CIMA is front and center of the ongoing litigation with Maples and InterTrust on KYC-related matters.

        You can’t be too shocked and appalled when many of those commenting on this article view these BO/AML issues as part and parcel of the same thing.

        I have yet to speak to a single member of the financial services industry who is not rooting for the Walkers/Maples/InterTrust actions as they seek to curb the current approach being adopted by the authorities in relation to KYC documentation – not because we believe that Cayman should not have robust processes and procedures to prevent money laundering, terrorist financing, and proliferation (everyone is 100% behind that) – but because we are dealing with regulators who choose not to adopt a reasonable, rational approach to KYC. Instead, the authorities seem to be striving to fulfil an agenda that has everything to do with “showing these guys who is in charge” and levying penalties they can boast about to CFATF/EU, and nothing whatsoever to so with preventing heinous financial crimes.

        If this is the direction of travel, young Caymanians such as my own children would be well advised to think carefully before embarking on careers in financial services. The jobs in tourism look a better bet to me right now.

        • Anonymous says:

          Mr. Moxam correctly pointed out the ROC is not CIMA which is a valid point.

          Have an article written about the Judicial Review cases involving Walkers/Maples/Intertrust and let’s see if you will comment.

          My bet is he will not comment because they are cases before the courts which is the right thing to do as a professional director.

      • John Harris says:

        Johann is entirely correct that this case does not involve CIMA.

        It is however entirely typical and illustrative of the current problem faced by the entire financial services industry when dealing with any Cayman regulator.

        That is that the regulators’ main objective now is clearly to be seen to be imposing fines, whether or not they are objectively merited, whether or not the conduct in question is genuinely wrongful, and whether or not (it’s not) any useful purpose is served in the prevention of financial crime.

        The regulators (and the political masters they serve) appear to have no appreciation of the damage they are doing to Cayman’s economic future, and no understanding of the futility of trying to appease supra-national bodies such as CFATF which will NEVER be satisfied.

        As a poster above commented, everyone in financial services is rooting for those who are fighting back. Because if they lose, we will all be out of a job.

    • Shaky Wilson says:

      Like everything else?

  5. Anonymous says:

    The concept of updating expired Photonidenitification on the premise that you might not “know” them any more it’s ridiculous and a complete waste of time. Unless I change my name, I am still the same person and 10 pieces of photo I’d will it help you know me any better.
    Can someone tell me how that stops money laundering?

    • Anonymous says:

      It stopped being about stopping money laundering years ago. These days it’s all about imposing fines or trying to avoid fines.

  6. Anonymous says:

    CIMA, Tax Information Authority, Ministry of Financial Affairs etc etc have all lost the plot …

    Killing to golden goose with incompetent people trying to enforce laws for industries they don’t understand.

    • Sir Humphrey says:

      Perhaps somebody somewhere in the CIG can tell the Italian Government who owns the $700 million super yacht sitting in a port in Italy belongs to.


      Nobody seems to know.

      Rumor has it that Puty has it registered here. Time to step up CIG because everyone is talking about the yacht in Italy.

  7. Anonymous says:

    CIG does not generally follow the law until all other options are exhausted.

  8. Anonymous says:

    CIG has always done the minimum required by foreign governments including:
    1) staffing regulators with inexperienced unquestioning form fillers
    2) establishing required laws with minimal enforcement
    3) limiting regulation and guidance allowing for broad and favorable interpretation by industry.
    This has suited industry in the past but as we now see industry isn’t as happy when the regulators actually try to apply the obvious purpose of the law.

    • Anonymous says:

      You were correct to begin with and then wrong.

      please remember who drafts the regulations – the industry. Its more over CIMA and the ROC are now just making it up as they go along.

    • Anonymous says:

      CIMA and ROC desperate to impose fines for something so that they can claim that they are enforcing the regulations – one of the reasons we are on the grey list is a lack of enforcement. They would rather try and claim scalps for things like not keeping your drivers licence copy up to date then tackle the real offences FATF are concerned with, such as layering, laundering and corruption.

  9. Anonymous says:

    Problem with CIMA is that the dumb organization. Lap dogs of the OECD, and FATF.

  10. Anonymous says:

    It’s a pity these people missed the opportunity to fine the likes of HSBC for massive, repeated, actual laundering of billions of dollars, instead choosing to nickle and dime local service providers for nonsense rules they make up on their lunch break.

  11. Anonymous says:

    I wish the police force would issue tickets at the rate that the financial services regulators seems to be issuing fines. The only downside is that global financial groups will eventually have enough and leave Cayman.

  12. Bottle says:

    Doesn’t CIMA know how hard it is for an oligarch to pop back on their jet to get a new passport at the moment in whatever tax haven they have bought a residency?

  13. Anonymous says:

    Wait what!! There is an obligation to update identification documents outside of the risk based periodic reviews? This is contrary to the AMLRs and guidance notes.

    • Hubert says:

      Fact is that Walkers administration on this matter is very bad. They should be updating information within a reasonable length of time. That’s what they get paid the big fees for.

      • Anonymous says:


      • Anonymous says:

        That is very true. If Walkers want collect the high value fees charged to and paid by their clients, the have to abide by the law. Isn’t that what law firms and lawyers are supposed to do?

    • Anonymous says:

      O so naive. If you were in a professional and progressive firm with an excellent reputation, your client would have been told AT INCEPTION that properly certified ID docs would need to be appropriately refreshed upon expiry or replacement; AND that the FS firm would have the procedures and ability to re-file as needed, to whichever relevant authority required that info under the law. If walkers find that difficult or unpalatable, then maybe their client base is not of great quality, and by extension, neither are walkers. You then have to question what they are hiding. Fines are easily avoided.

      • Anonymous says:

        And WHY should the passport be updated in that manner?

        What is the purpose of such a requirement?

      • Yolande says:

        I totally agree with you and have debated this myself many times with industry people. New passport = new number and possibly passport from new country. Sadly some compliance people and the Regulatory policy writers don’t want to spend time checking and receiving new ID info so bizarrely waive this requirements. No excuse this day in age to not be monitoring expired ID docs and sending out reminders within 6 months to ask for new documentation. Maybe with Covid, an extension could be allowed but years later – no excuse. Let’s see how this plays out.

      • Anonymous says:

        Oh really? Read the GN and AMLRs. What you are suggesting is not required. Most sophisticated FIs understand the risk based approach and do not waste their resources as you have suggested. Sounds like your management team needs to reconsider your position.

    • Anonymous says:

      Certain portions of the AMLRs are ultra vires in any event and the stress tests via court action will prove that to be the case.

  14. Anonymous says:

    Go Walkers!! Smarten up the Government!!

  15. Anon. says:

    I think CIMA really need to consider better in-house and/or external counsel to advise them on statutory interpretation. If CIMA are to enforce the law, they must have a firm understanding of it first. An expired passport is NOT relevant change in sense that the law intended. And CIMA has to take a more sensible approach. If a major financial services organization collects full client due diligence at the beginning of the relationship with their client, then that client’s information gets reviewed and updated on a regular basis (say every year or two), what difference does it make if the passport expires in between checks? The client’s due diligence was collect when it should have been. Reviewing and updating information on file on a regular basis shows that the organization has proper procedures in place, which is what is required by law. How the heck is the passport expiring between checks even relevant? And it is unreasonable to expect most organizations to request new KYC for every single client before his/her passport expires! The administrative burden of doing so would be overwhelming.

    • Anonymous says:

      “And CIMA has to take a more sensible approach”

      Well, Mr.

    • Johnny Canuck says:

      Anon, Overwhelming? You jokin? Not difficult using modern technology. Companies pay big bucks for the service they get and Walkers should update their technology platform.

      • Anonymous says:

        Johnny, by technology you mean emailing a client 42elewenteen times to obtain their passport copy and getting nowhere right?

      • Anon. says:

        @Johnny Canuck You must be referring to the larger firms that can afford such technology. Small to mid-sized firms (of which there are many locally) have for years been wrestling with trying to find an affordable application to solve the problem of requesting KYC from client’s, then chasing them endlessly until it is actually received, then pushing back on KYC docs that are improperly certified or expired or illegible or not translated to English, then endlessly chasing THAT up until received, then entering the KYC information (manually) into a database, then running checks against World Check and sanctions lists, then completing the many internal and external reports, then scrubbing the KYC daily, then investigating daily hits, then clearing those hits, then monitoring KYC on hand, then requesting updated KYC, then chasing THAT up…..

        If you can find an application that can do all of that, that doesn’t require the man hours and administrative burden of hiring someone knowledgeable enough yet affordable enough needed to populate it in the first place, one that small to mid-sized shops can afford, please do share that information with the industry.

        Did I mention that none of this work is client-facing income earning work? All of those man hours produce zero income.

        • Anonymous says:

          It is a cost of doing business when you are a big law firm making millions every year. Invest in leading edge technology but that means spending some money.

    • Anonymous says:

      Exactly correct – you’re still the same person even if your passport expires.

      The whole point of this exercise is to know who your client is, and to understand the source of their funds.

      The way this whole regime works is the ultimate example of form over substance.

      If CIMA got overzealous in terms of situations where firms don’t know the UBOs behind companies or trusts or never documented source of funds, this would be completely understandable.

      A focus on expired documents shows that they completely don’t understand what they’re doing.

      • Anonymous says:

        If your passport has been revoked by a state there is a reason.

        • Anonymous says:


          FS providers scrub client’s names through acuity checks and other databases on a regular basis to pick up sanctions, crimes, etc.

          A new passport is irrelevant to that process.

        • Anonymous says:

          All the passport is for is to evidence you are who you say you are. It doesn’t matter if you lose it, it expires or it gets revoked, you’re still the same client.

        • Anonymous says:

          Like Trumps Russian friend Paul Manathorpe on the way today from Miami to UAE on a revoked passport.

      • Anonymous says:

        Well yes, everyone knows that.

    • Anonymous says:

      Can we talk about what risk we are mitigating by requiring someone somewhere to certify a document with a phone number, address etc for a low risk client? Because writing those details down prevents fraudulent IDs. Its a proper joke. Where is the risk based approach.

  16. Anonymous says:

    Like far too many law firms and practitioners, Walkers don’t want to reveal who their clients are, mostly because they themselves don’t want to drill into that and find out themselves. It’s less about preserving lawful anonymity, and more about the administrative non-billable hassles of complying with PCAMLCTF zeitgeist, which they are almost certainly on the wrong side of.

    • Anonymous says:

      But both Walkers and CIG/CIMA already know who the client is. All that has happened is the passport has expired prior to their periodic update. If your passport or driving license expires, or you lose it and have it replaced do you expect your bank to immediately demand certified copies of your new one? It doesn’t even achieve anything; they still know who you are.

      • Anonymous says:

        12:11, What if the passport of the Russian oligarch has been revoked?

        • Anonymous says:

          Indeed – so what?

          You seem to think that these firms use the passport to check whether the individual is now on a sanctions list or otherwise convicted of crime.

          More evidence that you don’t really understand the system you’re commenting on.

          Must be “dilettante Tuesday”

        • Anonymous says:

          It wouldn’t matter, because they’re already on a sanction list of some sorts, which is even public info.

        • Anonymous says:

          Then what difference does it make if the one you have on file is current or recently expired? Still the same person and if he’s sanctioned then he’s still sanctioned. What’s your point?

    • Anon says:

      That view is just stupid!

    • Seriously? says:

      @22/02/2022 at 9:31 am. You sound like one of those people that believes that the Cayman Islands are exactly how they are portrayed in bad TV shows. You clearly don’t have the slightest clue what you’re talking about.

    • Anonymous says:

      Did you read the article? No one is trying to argue that they don’t need to know who their clients are – they are making the point that an expired passport isn’t a material change in information.

    • CSF says:

      This has absolutely nothing to do with revealing/not revealing who clients are.

      It’s about the ridiculousness of the approach to papering AML/BO, and the heavy-handed imposition of fines, by the authorities in various different scenarios that logic and reason would indicate are minor “form over substance”-type situations. Am I no longer identifiable as a real person because the Cayman passport that Walkers has on file for me has recently expired? Please.

      Is this an administrative hassle? Absolutely. But the Cayman authorities have become so prescriptive and focused on box-ticking/sourcing the basis for fines they can then publicize to the likes of the CFATF/EU that they are turning financial services providers in the jurisdiction into embarrassing pedants in our dealings with clients – the formulaic wording CIMA (and perhaps the other authorities as well) is insisting upon as part of certification of passports and utility bills can now barely fit on the page. Service providers are quite rightly concerned that a lack of perfection in a low-risk KYC package may result in a disproportionate fine (and perhaps multiple fines for the same minor breach).

      So much for the risk-based approach we are supposed to have adopted.

    • Anonymous says:

      Maybe read the article first?

  17. Anonymous says:

    I would look that up but the organization of the Judicial Services website is such that it would take quite a bit of time to figure it out so I gave up.

  18. Anonymous says:

    Walkers are plainly right. It is accepted internationally that passports remain valid forms of identification even after they expire and are longer valid for travel. This emphasis on expired identification documents is gross overreach by a regulator that should frankly know much much better. General appearance, date and place of birth, name and nationality are all things that remain constant whether or not a passport is valid.

    • Sir Humphrey says:

      8:53, You obviously are clueless about how the mega rich Russians operate.

      • Anonymous says:

        Russian billionaire Roman Abramovich does business using 5 passports. Russian, Israeli, UK, Portuguese and St. Kitts.


      • Anonymous says:

        What do Russians have to do with expired passports? You don’t need a passport to claim nationality.

      • CSF says:

        This has nothing – literally nothing – to do with Russians.

        8.53 is not the one showing his/her ignorance on the subject-matter of the article.

        • Sarasota Steve says:

          CSF, Perhaps you are not aware that 6 EU countries have or in the process of revoking Golden Passports that have been issued to Russian oligarchs the past decade.

          8:53 is bang on.

          • Anonymous says:

            But so what? They are still the same identifiable people. Nothing to do with this lawsuit and they will just stand in a different line with their Russian passports (assuming their jets were also seized.)

        • Anonymous says:

          CSF, I guess all those mega yachts flying the Cayman flags around the world have nothing to do with Russians too?

          • CSF says:

            Russian-owned mega-yachts (Cayman registered or not) have nothing to do with the article/the court action/the Cayman authorities’ approach to expired passport documentation. I am baffled as to why an intelligent person would collate the two.

      • Hubert says:

        8:53 has never heard of Golden Passports for Russian oligarchs and how they are used.

      • Anonymous says:

        Why are people so quick to opine on things they clearly know absolutely nothing about?

        Nothing to do with Russians, nothing to do with rich or poor – merely a matter of identifying your ultimate customer. A passport does this. The fact that it expires is entirely irrelevant to that fact.

        If people were really focused on efficient and effective AML processes, we wouldn’t be forcing businesses to spend time and money implementing procedures that aren’t legally required and which reduce the time spent on ACTUAL sensible steps.

        • Hubert says:

          4:22, You think the CIG can identify the Russians who own yachts that fly Cayman Islands flags?

          The answer is no. We do not know who the ultimate customer is.

          You are the one who knows nothing smart ass.

          • Miami Dave says:

            I would like to know when the CIG is going to start de-registering Russian oligarchs who have yachts that fly the Cayman Islands flag?

            • Anonymous says:

              Dave, Will never happen because CIG does not know who the individual owners are but they do know the company.

    • Anonymous says:

      KYC at retail banks is gross overreach.

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