Cayman improves compliance over virtual assets
(CNS): The Cayman Islands is now compliant or largely compliant with all 40 of the Financial Action Task Force (FATF) recommendations following improvements to how this country manages its virtual assets regime. In the latest follow-up report released this month assessing how the jurisdiction’s technical compliance with anti-money laundering and counter-terrorism financing (AML/CFT) measured up to the stricter requirements, the task force found that Cayman had addressed most issues.
Nevertheless, the latest report notes that the jurisdiction is still “in enhanced follow-up” because of the low and moderate levels of effectiveness for over seven of the outcomes CAFTA is looking for when it comes to tackling global financial crime.
While the country has been focused on reviving tourism in the face of the COViD-19 pandemic, other civil servants have been working in the background to protect Cayman’s most important industry. This latest upgrade will help the jurisdiction but officials said work to enhance compliance with international standards in anti-money laundering and counter terrorist financing continues.
“Last year government requested that the Caribbean Financial Action Task Force (CFATF) revisit the ratings that we received in their last report in 2019, to reflect the many actions we have undertaken since they last assessed our framework,” said the Attorney General Samuel Bulgin who chairs the Anti-Money Laundering Steering Group.
“We are very pleased to be rated compliant or largely compliant with all forty of the FATF Recommendations. While we still remain under monitoring with regards to three out of the 63 areas for improvement recommended by the 2019 report… these have to do with effectiveness and are assessed separately.”
This means the Cayman Islands is at the forefront out of all jurisdictions assessed so far on technical compliance.
In December 2020 the United Nations Convention against Corruption was extended to the jurisdiction and the International Convention for the Suppression of the Financing of Terrorism was extended in August. This Convention requires signatories to criminalise the financing of terrorism, as well as to take measures to identify, detect and freeze assets related to terrorism, and to prosecute terrorism financing offences.
Bulgin said the extension of these conventions demonstrates that the jurisdiction has the appropriate legislation, structure and organisations in place to meet its international obligations with regards to AML/CFT.
See the full October report here.
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Category: Business, Financial Services
Fundamentally, cryptocurrencies, laundering, and criminal activities all go hand in hand. It is precisely the payment mechanism for those that wish to bypass the declarations of regulated international payments systems, sovereign currency exchange controls, arrest warrants, trade embargos, and/or obscure identities and source of funds. Even authoritarian regimes are issuing their own e-currencies to lure support of hot money and attempting to artificially bolster their capital position. China’s state-owned Union Pay credit card offers direct swap payment settlement to crypto, and is now accepted throughout G20. Unfortunately, the Cayman Islands have always been right in the boiler room of this noxious activity, stemming from Tara Rivers’ wait and see AML policy. We are in the business of hosting dozens of crypto exchanges, currencies, and headline ICO frauds, and having yet to see an instance of them in action, we can’t be too confident that CIMA is on top of this. In Cayman, there is no published history of white collar charges in this sector. None of Cayman’s lawyers charged with any crime or professional negligence, let alone de-barred. No consequences for CEZ. Carry on seems to be the message from this AG.
Q. Will this Attorney General ever feel the time is right to investigate oft-cited political corruption and laundering? What about directing resources for arrests, charges, and prosecutions for those friends? With the DPP dropping serious charges against a senior Immigration official, the FATF and CFATF will be recording more of the opposite type of unhelpful confirmation. This messaging continues to affect us all, and leads down the path to harder consequences.
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Not enough fines, not enough prosecutions (0 money laundering) a regulator that is under-staffed and under-experienced. It’s not about the 40 recommendations being put in place. It’s about applying them fining firms and prosecuting individuals who breach the law. Cayman needs a regulator that knows what it’s doing.
Have you not noticed how many fines they have issued recently?
And maybe there haven’t been any money laundering prosecutions because, I dunno, perhaps there’s no money laundering going on in the financial services profession here?
Oddly enough, professionals don’t want to risk their licence and livelihood helping clients cheat taxes.
It’s hard to believe that there is 0 money laundering going on in the world’s second largest hedge fund sector and one of the major financial centers. I think the more plausible explanation is that there is no money laundering prosecution because there are no investigations and no investigations because the RCIPS is not competent in this field. How much experience does our Police Commissioner have with economic crimes? I believe his experience is with local gangs and drugs rather than sophisticated financial crime. I stand to be corrected thoguh
CIMA is not under-staffed but they are not competent. Anyone who has been through an inspection knows this is a fact.
Fines? A little late now particularly First Cayman Bank and we all know who was involved in that. If CIMA pretends to be the SEC how about fining audit firms for incompetent audits when banks and funds have gone belly up.
How about Offshore Magic law firms with a global presence, who have flagship firm headquartered in the Cayman Islands?
Why have their been no arrests of partners for accessory liability to criminal offences for assisting unlawful-unlicensed practice of Cayman law by foreign lawyers in other jurisdictions?
Why has the Attorney General not done a damn thing about this, except for assist them?
CILPA/CARA (Cayman Islands Legal Practitioners Association as well as Cayman Attorneys Regulation Authority) is a shield of protection against the large law firms own wronging and it has used its ultra vires power (given to it by Alden as Premier of the PPM-led Unity Government) to us AML regime as a TOOL OF OPPRESSION AGAINST CAYMANIAN ATTORNEYS.
It seems that Caymanian attorneys, who operate as sole practitioners and in small law firms, are being intentionally discriminated in the Cayman Islands in favour of non-Caymanian attorneys. This is unconstitutional.
Why are we even wasting our time following CAFTA most of their suggestions are in my opinion trying to literally put Cayman out of business, I swear it is like letting the wolf into the hen house with them.
I would love to know more about this. I don’t work in financial services so a lot of this is all Greek to me. It would be good to know more about how all the service providers work and how these rules are a threat, and why they’re not valid.
In essence, they are trying to impose the nth degree of requirements onto service providers which jointly increases:
1. the workload and the risk of providing services for the service provider (due to the risk of fines from CIMA)
2. the fees for the jurisdiction.
For example, the implementation of private fund registrations is apart of this. As there is alot more private funds, they obviously have to pay increased legal, compliance, audit and annual fees. Now – PF are not really too much of a big deal since most of them can afford it. CIMA also doesnt get too involved so you dont have to deal too much with their stupid antics. That said, there is a whole host of other stupid $hit that we must do (source of funds, economic substance, KYC, guidance notes, CIMA blah blah blah) which has increased the workload 10 fold.
The Attorney General, Samuel Bulgin, who chairs the Amit-Money Laundering Steering Group, does not understand what he’s doing.
The AG, who keeps making promises that he cannot keep, believes that international obligations must be followed in the manner that he’s told.
The AG (and other parties) forget our Constitution (the supreme law of the Cayman Islands) and the need to have respect for Constitutional Supremacy. International obligations are subject to the jurisdictions’ Constitutions (especially the Bill of Rights).
What exactly in the FATF standards is against the bill of rights or the constitution?!? Also you know right that the 40 standards don’t apply here unless they are made into Cayman law? So the comment about constitutional supremacy is irrelevant to this conversation