Intertrust to pay $5M CIMA fine for AML failings

| 08/11/2022 | 106 Comments
Cayman News Service
CIMA and Cayman Islands Stock Exchange offices in George Town

(CNS): Intertrust has agreed to pay $5 million to the Cayman Islands Monetary Authority after the courts dismissed its appeal against an administrative fine of over $4.23 million for its failure to meet anti-money laundering regulations. According to a document posted on the Grand Court website last week, the offshore legal and financial services firm has agreed to pay the fine, the largest ever collected by CIMA, and more than $767,000 in legal fees for costs.

The fine was imposed by CIMA in May 2021 but legal wrangling had stretched out the case. The Grand Court dismissed the appeal against the fine in June 2021 and ordered the parties to sort out costs. The latest filing shows that Intertrust has signed an agreement to pay the significant fine as well as most of CIMA’s costs.

CIMA had contended that there was a “pervasive and protracted history of non-compliance” at the firm regarding specific obligations under AML rules. It identified six violations relating to due diligence measures on the original notice, which the regulators said had been discovered during an on-site inspection.

At the time Intertrust said it was appealing because it related to historical issues that it was already working with CIMA to address.

“The breaches alleged are administrative in nature and there is no suggestion that Intertrust has engaged in or facilitated its clients engaging in money laundering activities,” the firm said at the time.


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Category: Business, Financial Services, Politics, Private Sector Oversight

Comments (106)

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  1. Anonymous says:

    Will CIMA be able to accept the funds, if the penalty relates to money laundering breaches? How can CIMA get comfortable the cash is coming from legit sources?

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    • Anonymous says:

      Actually the fines are not related to money laundering. Just the perception of deficient paperwork regarding entities.

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      • Anonymous says:

        omg…if it was perception you would have won appeal…..weak aml controls that could have enabled money laundering.

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        • Anonymous says:

          They settled. Curiously just before the sale to CSC went through. Surely our regulator would not have refused to give consent unless they settled?

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  2. Anonymous says:

    All unna can talk ish about cima on this platform but when cima come to do an inspection unna quiet

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  3. Anonymous says:

    There are plenty more business in Cayman that comply with the AMLRs that will absorb the clients – intertrust can GO

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    • Anonymous says:

      For most part they don’t want that business….let it go to Panama or Marshalls

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    • Milanna says:

      Yes, it can go and take with them the jobs of so many people. Not everyone would be absorbed by the market, specially in the current situation.
      It can go and reinforce the idea that service providers here, in this dodgy Caribbean Island, are doing such wrong things that the only solution is “death”.
      A Company is a person, it is one further option for the work force in Cayman, it has history and purpose, and it is a kind of family for many. Problems? Yes! Solutions? Yes! In which one should the industry focus?

  4. Anonymous says:

    CIMA has a problem retaining good folks.

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    • Anonymous says:

      CIMA doesn’t want good folks…..they want people that tick boxes with no understanding of industry or common sense.

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      • anon1 says:

        All yes people been told. If you don’t nod heads with board or organization heads, your head on the choppin blocks.

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      • Anonymous says:

        You are completely wrong, CIMA has adopted a Risk Based Approach, haven’t you heard all of their conference speeches? They are not interested in passport copies, utility bills etc…..

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  5. Anonymous says:

    The problem is CIMA act as judge, jury and executioner in these cases.

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  6. Anonymous says:

    If CIMAs plan is to chase business out of Cayman this is a good day for them.

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    • Anonymous says:

      yes that kind of business…new world man…maybe you should retire.

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      • Anonymous says:

        So back to reality now, all their business was legal and legitimate. They were not fined for the type of business they took on nor fined for having any clients involved in illegal activities.

        They took a 5 million dollar fine for having deficient paperwork by an authority that does not have clear requirements in practice. We are so far out of international and western requirements with our due diligence and that the bar is go high that you can ponder the question why?

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        • Anonymous says:

          CIMA did not conclude their business was all good and legit….they concluded their procedures were so weak they could include elicit activities. Sounds like you are one of those criminals.

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        • Anonymous says:

          Spouting self serving bs didn’t work with CIMA and doesn’t work here….be happy you’re not in jail.

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  7. Anonymous says:

    The joy with which some of those that live in Cayman greet this sort of thing is really astounding.

    Here are a few facts:

    1. Financial services pay for the vast majority of the public services here.

    2. The levying of fines of this magnitude is 100% driven by political considerations and in particular the pressure certain sectors of the international community are applying to try and attack the Cayman Islands.

    3. These were administrative failures.

    4. Fines for these sorts of breaches elsewhere in the world do not carry anything like this level of penalty – including in the US, the UK, or other EU countries.

    If Intertrust had been positively aiding terrorism or money laundering, then I would understand it. But they were not.

    The fact that so many who live here seem to rejoice at such a naked political attack on our core industry is truly odd.

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    • Anonymous says:

      I know a couple of people like this. Both complained bitterly about the financial services industry here. Of course that didn’t stop either of them endlessly trying to get jobs in it for which they were hopelessly unqualified and incapable of. Some people simply project their own inadequacies on others so that they feel better. “Well I didn’t want the job anyway, all they do is launder money” etc…

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      • Anonymous says:

        Are you talking about the Caymanians, who, when they apply for such positions, are told that, although they more than meet all qualifications and experience criteria, are told that they are overqualified?

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    • Anonymous says:

      They don’t know if they were but their procedures were intentionally weak enough they could have.

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  8. Orrie Merren 🙏🏻🇰🇾 says:

    Illegal-unlicensed — ie, not admitted, enrolled and/or holding a current practice certificate in Cayman — practice of Cayman law by overseas lawyers, where there is a Cayman Islands law firm with a multi-jurisdictional presence, then partners in such law firms in Grand Cayman (as well as financial service providers, who register instruments drafted by such unlicensed overseas lawyers) are exposed to criminal liability, where any such unlawful profits are deposited into the formal monetary system (eg, deposited into a bank account) and tainting the legal money supply with illegal profits (ie, ill gotten gains) that (depending on the specific fact-scenario) amount to money laundering offences (breaching, inter alia, ss.10(1), 12(3), Legal Practitioners Act taken in conjunction with ss.133-136, 142, 144, Proceeds of Crime Act and ss.4, 321-322, Penal Code — see also James Kessler QC (now KC) and Tony Pursall, Drafting Cayman Islands Trusts (2006, Kluwer Law International) at pp.8-9).

    In R v Rogers [2014] EWCA Crim 1680 at [52], the English Court of Appeal stated, inter alia, that:

    “The offence of money laundering is par excellence an offence which is no respecter of national boundaries. It would be surprising indeed if Parliament had not intended the [Proceeds of Crime] Act to have extra-territorial effect (as we have found it did).”

    Unfortunately, the Hon. Attorney General (who sometimes complains about “AML fatigue”) and successive governments (both executive and legislative arms) have turned a blind eye of connivance to this, despite this being pointed out directly to them.

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    • Anonymous says:

      Orrie. As usual, you are correct. The only natural conclusion at this stage is #Leggewasright. Our organs of state meant to enforce the laws of the land appear too often to be enablers and facilitators of their breach – from Kowloon to Public Beach. Their failure to act in relation to overt unlawful conduct seemingly knows no boundary. Make an administrative error however, and there is hell to pay.

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    • Anonymous says:

      Do you cut and paste this legally incorrect and passage into every article?

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      • Anonymous says:

        Cutting and pasting is for corporate and investment fund practitioners.

        If it is legally incorrect, as you inaccurately contend, then an explanation is in order.

        Trying to dismiss his well-articulated position with sweeping generalizations and unsubstantiated accusations does not pass muster.

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        • Anonymous says:

          I’ve pointed out why it’s incorrect in other threads. I am not interested in repeating the process YET again, sufficed to say, that if you think Cayman Islands criminal law works so as to criminalise activities in London or Hong Kong, you simply don’t understand the canons of statutory interpretation.

          Your snide (envious?) and inaccurate comments about “corporate and investment fund practitioners” are irrelevant to the point, but do at least serve to show you up as someone with a chip on their shoulder / axe to grind – such that your point of view on this is no doubt coloured by personal animus rather than any cogent thought.

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          • Anonymous says:

            Sounds like you’re scared of consequences and trying (but failing) to deflect.

            Misdirection, which is a diversionary tactic, is what magicians use all the time.

            You are going to have to come with substance and not incorrect, sweeping (non-specific) generalizations.

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            • Anonymous says:

              Not even close.

              I have absolutely no personal dog in the hunt – if it were a clear criminal offence in Cayman for someone in Singapore to practice Cayman law without a certificate, it would have precisely ZERO impact on my life.

              However, the fact remains that the rules of statutory interpretation dictate that they presumed not to have extra-territorial effect, unless they specifically state otherwise (this is why it is ABSOLUTELY an exception and not the norm).

              There is nothing in the current Cayman statutory regime governing the practice of Cayman Islands law that explicitly claims jurisdiction over those that do not act within the Islands themselves. The Proceeds of Crime Act is irrelevant, as it only applies if a crime has first occurred. It’s rank question begging to think that it helps support the view being put forward

              If you don’t understand that, or don’t wish to, then I can’t help you further, but I suspect the issue is that you simply don’t WANT that to be the case, and that both you and the original poster have a personal vested interest in the the conclusion you’re reaching. Perhaps you are a local lawyer who is embittered about how things have gone… I don’t really care.

              Any one with even a smattering of decent legal training can see the absurdity of the idea that Cayman law should be read as automatically reaching the shores of HK, and funnily enough, it seems successive AGs and authorities would agree.

              Accept it or don’t, your choice.

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        • Anonymous says:

          OK – so just for fun, and because the original poster seems to love including case citations that don’t prove the point (presumably because it makes the post seem more learned than it is?) – here is what Halsbury’s Laws has to say about the point SPECIFICALLY with reference to British overseas Territories (i.e. the point is even stronger for Cayman):

          “There is a presumption that the legislation of the legislature of a British overseas territory is to be interpreted as having only local application (see Macleod v A-G for New South Wales [1891] AC 455, PC; R v Lander [1919] NZLR 305, NZ SC). This presumption is STRONGER than the ordinary presumption applicable to the enactments of the United Kingdom and other non-dependent legislatures (see R v Foster, ex p Eastern and Australian Steamship Co Ltd (1959) 103 CLR 256 at 274, Aust HC, per Dixon CJ). Indeed, there can be said to be a rule that, in the absence of authority expressly conferred for that purpose, the legislatures of British overseas territories are incompetent to legislate with extra-territorial effect (see Macleod v A-G for New South Wales).”

          I don’t suppose that will satisfy you given you have an agenda here, but if you choose to pretend otherwise, that’s your prerogative I suppose.

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          • Orrie Merren 🙏🏻🇰🇾 says:

            Section 4 of the Penal Code (2022 Revision), headed “Offence committed partly within and partly beyond the jurisdiction”, provides as follows:

            “When an act which, if done wholly within the jurisdiction of the court, would be an offence against this Law, is done partly within and partly beyond the jurisdiction, every person who within the jurisdiction does or takes any part in such act may be tried and punished under this Law in the same manner as if such act had been done wholly within the jurisdiction.”

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            • Anonymous says:

              Except the practice of Cayman law in Hong Kong can and is happily done without any aspect of that activity being done partially within the jurisdiction. So the above has little relevance.

              I suspect you simply don’t know how most of these firms operate. Which is fine – but it would be best to avoid pretense to the contrary.

              But again – as I say – you clearly have a vested interest in the conclusion you’re pushing.

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              • Orrie Merren says:

                Cayman Islands companies and other relevant entities are registered in the Cayman Islands, and the is an essential nexus to a Cayman service provider.

                That’s just one example (of many).

                • Anonymous says:

                  You have certainly moved your goalposts admirably here, but I can understand why you would want to.

                  In any event, every law firm provides legal advice in HK through a separate entity with separate personnel, so the persons providing legal advice in HK are not registered in Cayman. As above, you don’t seem to know how these things work, but given you have a clear personal agenda, I suppose that doesn’t really matter to you.

                  You’re just wrong about this. The fact that no AG or authority has ever taken the same view you’re taking speaks volumes.

      • Anonymous says:

        Struck a nerve!

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      • Anonymous says:

        Got attention of your radar. So much so that discrediting the content of his message (sine causa) became imperative.

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        • Anonymous says:

          Not at all – just tiresome to see something inaccurate repeated over and over again on threads that have absolutely nothing to do with the legal industry.

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  9. Anonymous says:

    No wonder Walkers were in such a hurry to prop up the ultra vires CILPA-CARA self-regulatory AML regime for lawyers, which has now proved an epic failure.

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    • Anonymous says:

      1000000% correct. Self regulatory body was what FATF said WOULD NOT WORK and they did it anyway. CILPA/CARA does nothing, offers nothing, provides nothing.

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      • Anonymous says:

        Be fair. They enable and facilitate the overt breach of multiple Cayman Laws, ranging from immigration, to unlawful practice, to fronting. A sickening veneer of respectability that almost anyone who truly deserves to be a member of the profession can see right through.

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        • Anonymous says:

          Serving their masters. Unquenchable thirst for $$$. Bending over backwards, figuratively of course.

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      • Anonymous says:

        Offered potential protection for some. Failed attempt at a power grab. Botched that epically. Was not honest with international bodies.

    • Anonymous says:

      What does this have to do with Walkers? Intertrust is nothing to do with them.

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  10. Anonymous says:

    I wonder which came first…CIMA issuing its consent to the sale (which will have been a condition precedent to the deal) or the settlement of the appeal? I know where my money is.

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  11. Anonymous says:

    Why does CIMA only ever go after local firms? Why didn’t they go after HSBC for example?

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    • Anonymous says:

      They did, do you still see HSBC operating here?

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      • Anonymous says:

        CIMA had nothing to do with HSBC pulling out.

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      • Anonymous says:

        Nope. As I understand it… HSBC Mexico were busted by a US senate investigation in 2012 for running a “Cayman Branch” shell bank to circumvent US money laundering safeguards. The “Cayman Branch” of HSBC Mexico was run from Mexico and had no Cayman staff or customers. HSBC Mexico held $2.1bn in 60,000 accounts in Cayman. In 2012 the US fined HSBC $1.9BN and in 2013 CIMA revoked HSBC Mexico’s banking license. In 2014 HSBC Cayman voluntarily chose to close it’s retail and corporate business and sold to Butterfield. Ironically HSBC Cayman left due to the reputational risk of operating in Cayman; a reputation they were in large part responsible for. AFAIK CIMA didn’t fine them a cent.

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        • Anonymous says:

          I do not know all of the details but from what I do know, this is correct. saunders was at the helm of the cayman entity and AFAIK was at the helm of another cayman entity that folded under similar circumstances. for the life of me I cannot remember what the second entity was.

      • Anonymous says:

        CIMA shut HSBC Mexico’s Cayman branch down a year after HSBC Mexico closed the accounts! HSBC Cayman, the local branch, closed a few years after that but not because of CIMA.

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    • Anonymous says:

      They did not have the power to do so then!

      CIMA is doing its job and by the way so is CARA. Get used to it and comply with reasonable standards to leave our reputation untarnished!

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      • Anonymous says:

        Second half of second sentence wrong. Their is no job. Playing ghost busters is just an imaginary game. Duppy know who fi frighten.

  12. Anonymous says:

    Every so often, a reality check slips out… case in point: our amazing economy, fancy lifestyles, strong middle class and more, is built on a corrupt underbelly that so many benefit from. Cayman’s banking, legal, real estate institutions have just gotten smarter over the years but the core is still: how to hide and move money that otherwise wouldn’t be as keenly welcomed in general circulation. FACT!

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    • Anonymous says:

      CIMA’s pretty arbitrary with their application and the guidance is a joke.

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    • Anonymous says:

      Saying FACT, doesn’t make it a fact, it simply makes you look 12. Your post is complete drivel.

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    • Anonymous says:

      You have absolutely no idea what you are talking about.

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    • RME says:

      I don’t think that adding the word “fact” in capitals strengthens an argument.
      Either way, yours is inaccurate.

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    • Anonymous says:

      How to tell me you don’t understand what happened here without telling me you don’t understand what happened here.

      These are administrative failures, not evidence of any corruption of any sort at all.

      You simply don’t understand what this is about or what “administrative” means.

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      • Anonymous says:

        The “administrative” fine issued under AMLRs is “penal” in nature.

        • Orrie Merren says:

          Correct.

          See Attorney General of Canada v Federation of Law Societies of Canada [2015] 1 SCR 401 at [37] per Cromwell J (Supreme Court of Canada).

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        • Anonymous says:

          I didn’t refer to the fine. I referred to the nature of the failure, so I am not sure what sort o point you’re trying to make?

    • Anonymous says:

      clearly you have never worked in the financial services sector. Regulation, tight procedures, and paranoia over CIMA sanctions or reputational risk, makes hiding/moving ill gotten gains unpalatable, if not impossible. If you know any firm that is facilitating crimes, report it to the authorities.

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    • JTB says:

      You don’t have a clue what you’re talking about.

      FACT.

    • Englebert says:

      No one is rejoicing yow. Clearly there has been a lackadaisical attitude at Intertrust for quite some time. For those who have dealt with them have found that there have been instances of total disregard of basic due diligence principles like “addressing Beneficial ownership.

      One has to realize that even a small part of a rotten apple can have effect on the whole. Employees who are badly trained carry their inadequacies elsewhere and the best goes on.

      Hey you mister or mrs know it all, you’re posting anonymously, why don’t you orovide some more details in the name of assisting in ending the corruption you are so eloquently and visibly aware of. Your rant does not help anything if snyone sadly.

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  13. Anonymous says:

    In my opinion they should have lost their license long ago…..maybe operations, management and hiring practices will change with this penalty and recent sale of business.

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  14. Anonymous says:

    Lol, that’s just their Christmas bonuses.

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    • Anonymous says:

      In the grand scheme of things it’s a parking ticket. However CIMA is a bunch of weasels though with taking ZERO onus on providing clear requirements to service providers on island but instead judging services provides on their compliance requirements based on continually moving goal posts by CIMA on a whim like a drunken medieval tyrant “off with their heads” mentality. Hey CIMA how about you grow some balls and issue clear universal requirements? Oh but you don’t want to do that because then you will be the one judged by the international community who’s motive is solely to torpedo Cayman’s financial sector and turn Cayman exclusively into a Sandal’s Resort.

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      • Anonymous says:

        Obey the law next time and these things will not happen.

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      • Anonymous says:

        most companies know the requirements but a few make a lot of money out of actively ignoring common sense and then crying regulator foul when their blatant abuse is caught.

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        • Anonymous says:

          How do you “make a lot of money” causing an administrative breach of the regulations?

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          • Anonymous says:

            Administrative fine is a drop in the bucket compared to actual profits. It’s a volume game, which is lucrative.

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            • Anonymous says:

              that doesn’t answer the question. 8:02 said they “make a lot of money out of actively ignoring common sense and then crying regulator foul when their blatant abuse is caught.”. How does that make a lot of money? Sounds like a nonsense assertion.

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          • Anonymous says:

            you’re kind of dumb….you take on the business no one else wants…run it for years charging huge fees until regulator finally catches up with you.

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      • Anon1 says:

        Like I said many times, who’s auditing the auditors (cima in this case). Been told they’re not always above board themselves.

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      • Anonymous says:

        At least it is admitted that $5 million is just a drop in the bucket compared to how much profits are being made.

        It really shows how much Caymanians are being left out of and how much non-Caymanians are actually making.

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        • Anonymous says:

          So point me in the direction of the unemployed Caymanians who are TRAINED/EDUCATED to do what the non-Caymanian employees of Intertrust are doing???

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      • Wtb says:

        Thank You!
        They state a rule then it’s noted that except in cases a-z and in combination of parts of subsection xyz etc etc
        It’s a nightmare, many firms and banks are left to their own determination
        CIMA state a requirement that’s it or it leaves you the option to determine if it’s ok and that varies with who is the boss that year.

    • Anonymous says:

      Is that the company that used to be Close Brothers.?

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      • Anonymous says:

        Walkers corporate services were bought out by Intertrust when they moved into Cayman man years ago if I’m not mistaken

      • Anonymous says:

        yep…. remember Grand Island Funds? So slimy they had to settled in Bahamas and then ignored involvement of Cayman big wigs and politicians brother and just sent the Jamaican guy to jail. Where was CIMA then?

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      • Anonymous says:

        Close Brothers became Intertrust Cayman

        Intertrust Cayman then purchased Walkers RO client book.
        InterTrust then bought up Elian, for Directorships,

        Lots of different AML databases, that needed consolidating

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        • Anonymous says:

          AML exposures then. Premier and Minister of Financial Services covering up such exposures. Nothing that could lead back to them or their friends: quid pro quo.

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    • Anonymous says:

      Not even.

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