The Financial Action Task Force (FATF) has today confirmed that the Cayman Islands as a jurisdiction has been 'grey-listed' in respect of its Anti-Money Laundering (AML) compliance. FATF assessed the progress that had been made since the Mutual Evaluation Report in March 2019 and has considered that gaps exist in the AML regime in Cayman.
In the FATF report, the Cayman Islands has been criticized on its number enforcement fines where there are breaches in respect of AML and the registration of Beneficial Ownership for Cayman domiciled entities.
James Kennedy commented, "Whilst I disagree that the grey-listing was necessary, of course the island has to take steps to show why this listing should be removed. It is a fact that Cayman is for the time being regarded as suitable for increased monitoring for anti-money laundering compliance, this does not mean each Cayman entity is high risk and it remains the case that each Cayman entity needs to obtain appropriate advice with respect to assessing its business risk and AML policies and procedures particularly with the heightened scrutiny that will come from CIMA as a result."
The outcome of the FATF Plenary this week is that the Cayman Islands of is now included in the FATF list of countries subject to enhanced monitoring. Listing is regarded as a signal to others across the globe that transactions and business relationships with a customer, financial institution or company in a listed country may present a heightened risk of money laundering and terrorist financing.
James Kennedy added, 'It is important to note that no economic sanctions result directly from the listing. Nor is automatic enhanced due diligence required. Everyone in Cayman must take the consequences of listing seriously. We will play our part in helping ensure Cayman is removed from the grey list as soon as possible.'
Notes for the Editor:
- For further information please contact KSG Risk on +1 (345) 325-6533 or info@ksgrisk.ky
- The FATF Plenary met in Paris this week: http://www.fatf-gafi.org/publications/fatfgeneral/documents/plenary-february-2021.html
- FATF maintains lists of 'High-risk and other monitored jurisdictions': http://www.fatf-gafi.org/publications/high-risk-and-other-monitored-jurisdictions/?hf=10&b=0&s=desc(fatf_releasedate)
- Jurisdictions under increased monitoring are actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing. When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring. This list is often externally referred to as the 'grey list' as per FATF, http://www.fatf-gafi.org/publications/high-risk-and-other-monitored-jurisdictions/documents/increased-monitoring-october-2020.html
- Plenary considered the progress made since the Cayman Islands Mutual Evaluation report: http://www.fatf-gafi.org/media/fatf/documents/reports/mer-fsrb/CFATF-Cayman-Islands-Mutual-Evaluation.pdf
- 'Anti-money Laundering' in the above news release also refers to Counter-Proliferation Finance, Counter-Terrorist Financing as well as Targeted Financial Sanctions.
- KSG Law can provide advice, and KSG Risk can provide bespoke business risk assessments for Cayman Entities which confirm individual risk ratings in the context of this news about the jurisdiction.