Up-Front
Cayman Islands Releases FATFResponse -
All FATF Anti-Money LaunderingCriteria Met
Submitted by the Marketing and Promotions Unit of Financeand Economic Development of the Government of the Cayman Islands
The Government of the Cayman Islands todayreleased details of its report to the Financial Action Task Force(FATF) on Money Laundering. The FATF will be meeting in Madridfrom October 4 - 6, 2000, and last week announced its intentionto conduct a preliminary review of corrective measures of "non-cooperative"jurisdictions announced in June.
Based on its June 2000 review, FATF stated that the primary 'deficiencies'of the Cayman Islands anti-money laundering regime involved customeridentification, internal reporting and record keeping. All ofthese areas, in addition to related issues, have been addressedsince that time. Legislative action has been taken to ensure thatmany of the guidelines, which existed previously as guidelineswithin a "Code of Practice," have since become legalrequirements.
"We have worked diligently over the past few months to ensurethat the regulations and laws of this jurisdiction meet or exceedboth the 40 FATF recommendations and the 25 criteria adopted bythe FATF in February 2000," said the Honourable FinancialSecretary, Mr. George McCarthy. "We are in full compliancewith these standards, and it was our hope that the FATF wouldreport publicly on its review, and then take prompt actions toremove us from the list of 'non-cooperative' jurisdictions. Welook forward to hearing about the 'de-listing' procedure and timetablefrom FATF."
The Cayman Islands began passing laws relating to money launderingand other financial crimes in 1984, and has continually amendedthem to keep pace with international standards. In addition, aCode of Practice with comprehensive guidelines for the financialservices industry was published in March 2000.
"We have been recognized by the U.S. and other countriesas leaders in the Caribbean region for our anti-money launderingefforts, and the legislation passed in July and September reflectsour continuing commitment to the fight against money laundering,"added Mr. McCarthy.
The main areas of concern raised by the FATF, and legislativeactions taken by the Cayman Islands, are outlined below with detailsof actions undertaken to address them:
Customer Identification & Record-keeping Rules: The CaymanIslands has compulsory legal requirements, with respect to relevantfinancial business, for customer identification, internal reportingand record-keeping in the Money Laundering Regulations 2000, whichcontain criminal sanctions. These regulations were passed on August7, 2000 and took effect on September 1, 2000.
Regulatory Cooperation: The Cayman Islands Monetary Authorityhas been enabled by the Monetary Authority (Amendment) (InternationalCo-operation) Law 2000 to readily access and share informationwith overseas regulators, including information regarding theidentity of customers in appropriate regulatory circumstances.This law was passed on July 14, 2000, and took effect on July24, 2000.
The Role of the Regulatory Authorities: The Cayman Islands MonetaryAuthority has reviewed its resources and has adopted a strategyfor enhanced on-site inspections of licensees within a finiteperiod.
Suspicious Activity Reporting: A new criminal offence was addedon July 14, 2000 by the Proceeds of Criminal Conduct Law (Amendment)(Money Laundering Regulations) Law 2000, making it a crime punishableby up to two years imprisonment to fail in the course of businessto report any suspicious transaction. This exceeds UK Law, whichhas such an offence only in relation to drugs and terrorism. Inaddition, the Money Laundering Regulations require by law thatfinancial services providers have systems in place to secure thereporting of suspicious transactions, punishable on a breach byup to two years imprisonment.
Companies Management: All classes of management companies aresubject to Money Laundering Regulations 2000, and are thereforepart of the anti-money laundering regime. The Money LaunderingRegulations adopted in the Cayman Islands are identical to thoseof the UK, but their scope is wider due to the broader definitionof relevant financial business.
Additional Points: In addition, on September 18, 2000, the LegislativeAssembly passed legislation regulating money transmitters, andtransferring the regulation of building societies and credit unionsfrom the Registrar of Companies to the Cayman Islands MonetaryAuthority.
"As one of the major international financial centres, wetake our anti-money laundering regime very seriously," saidMr. McCarthy. "There is no reason to penalize the CaymanIslands by keeping us on a list of "non-cooperative"countries when our recognized track record on anti-money launderingefforts, as well as the recent legislative actions, do not warrantthis continued classification."
The Cayman Islands, a United Kingdom OverseasTerritory, is one of the ten largest financial centres. Forty-threeof the world's top 50 banks have licensed subsidiaries or brancheshere. The financial services sector includes banking, mutual funds,insurance, company management, vessel registration, structuredfinance and the Cayman Islands Stock Exchange.
Laws of the Cayman Islands related to financial services regulation:
Monetary Authority Law (2000 Revision)
Proceeds of Criminal Conduct Law (2000 Revision)
Money Laundering Regulations 2000
Companies Management Law (2000 Revision)
Banks and Trust Companies Law (2000 Revision)
In June 2000, the Cayman Islands made an 'advance commitment'to the Organisation for Economic Cooperation and Development (OECD),and the jurisdiction did not appear on the OECD's list of 'harmfultax havens,' published on June 26, 2000.
The FATF's summary report of June 22, 2000, included a positivereport on the history of the Cayman Islands, stating, "ithas been a leader in developing anti-money laundering programsthroughout the Caribbean region. It has served as president ofthe CFATF, and it has provided substantial assistance to neighboringstates in the region.
"It has demonstrated exemplary cooperation on law enforcementmatters, and uncovered several serious cases of fraud and moneylaundering otherwise unknown to authorities in FATF member states.In addition, it has closed several financial institutions on thebasis of concerns about money laundering."