Thursday, March 21, 2019
The Cayman Islands has a high level of commitment to ensuring their AML/CFT framework is robust and capable of safeguarding the integrity of the jurisdiction’s financial sector. The jurisdiction’s AML/CFT regime is complemented by a well-developed legal and institutional framework. As a major international financial centre, the Cayman Islands is confronted with inherent ML/TF risks, threats and associated vulnerabilities emanating from domestic and foreign criminal activities (e.g. tax evasion, fraud, drug trafficking).
- The Cayman Islands has not provided the FRA with the tools to assist investigative authorities in the identification of cases. While the FRA is able to triage the SARs they receive, they have not been able to sufficiently analyse and disclose these reports in a timely manner. They also do not have access to the widest possible level of relevant information nor does the jurisdiction collect relevant information from its reporting entities (e.g. wire transfers) that would allow for the proactive identification of cases for investigation. The result is that there is a low level of usage of FRA’s disclosures to supplement investigations and they have been used to a negligible extent to initiate investigations.
- While the Cayman Islands has trained and experienced investigators in the Financial Crimes Unit (FCU) to pursue TF, training to improve awareness and understanding of TF among the competent authorities and the judiciary is required. There has been to a limited extent, TF investigations and no TF prosecutions in the jurisdiction.
- The jurisdiction may benefit from further training and outreach to relevant stakeholders in the areas of TF and PF so as to effectively implement the requirements of TFS measures.
- The AML/CFT supervisory/regulatory regime for Financial Institutions (FIs) and Trust and Corporate Service Providers (TCSPs) is established and understood by relevant stakeholders. Customer due diligence (CDD) measures and controls are well entrenched in the financial sector. FIs particularly the larger and established banks as well as the TCSPs have an understanding of their ML threats, appear to be more vigorous in their mitigating efforts, but lack understanding of their TF threats. Nonetheless, a portion of the securities sector is subject to limited supervision and not subject to monitoring for AML/CFT compliance or risk assessment (e.g. 55% of excluded persons under SIBL). This is a potential source of ML/TF risks, particularly with respect to the excluded persons that perform the higher ML/TF risk activities of portfolio management and broker/dealing. Due to limited assessment and compliance information on the persons conducting these activities, the extent to which the AML/CFT regime is understood by these persons has not been determined.