June 29, 2020 | Press Releases

Cayman Islands Final AML/CFT Assessment Postponed

 The deadline for the Cayman Islands to enhance its AML/CFT framework was postponed by four months due to the worldwide disruptions caused by the COVID-19 pandemic, as announced by the President of the Financial Action Task Force (FATF) in a letter to the jurisdiction. The Cayman Islands has an additional four months to continue to address the areas identified in the jurisdiction’s Mutual Evaluation Report, published in March 2019. 

Prior to the delay, the Cayman Islands was in a one-year Observation Period, which ended on February 21, 2020. A delegation from the Cayman Islands was scheduled to attend meetings with the Joint Group of the Americas in late April; the Group includes representatives from CFTAF member countries, the United States, Canada and the European Union. The final decision regarding whether the Cayman Islands had made sufficient progress against the 63 Recommended Actions was previously scheduled to be made in June, at an FATF meeting in China, before it was postponed due to the pandemic. 

The Observation Period now ends in late June 2020. The FATF decision about whether the Cayman Islands has made sufficient progress in implementing the 63 Recommended Actions in the Mutual Evaluation Report and whether it will impose a remediation plan is scheduled for the FATF plenary meeting in October 2020. 

The Attorney General, Hon. Samuel Bulgin QC, Chairman of the country’s Anti-Money Laundering Steering Group implored the relevant law enforcement and supervisory agencies to use this opportunity to continue their efforts to fully implement the 63 Recommended Actions. Further, he urged all financial institutions and other relevant financial businesses that are required to comply with the country’s AML/CFT regime to continue to improve their AML/CFT controls and continue to be vigilant in their fight against financial crime, despite the challenges posed by the COVID-19 pandemic. 

On this topic, the FATF warns that the pandemic also increased financial crime. In a communication issued on May 4, the FATF outlined how the pandemic can increase crime that could result in money laundering or terrorist financing, such as fraud through fundraising by fake charities, sale of counterfeit medical equipment, fake phishing emails allegedly sent by an official organisation or fraudulent investment schemes. 

In addition, the various isolation and shelter-in-place restrictions imposed by governments around the world result in an increased use of non-face-to-face financial transactions. This means that financial institutions might have to adapt their due diligence and ongoing transaction monitoring measures. Trade based money laundering should also be a primary area of focus at this time, according to Detective Chief Inspector Richard Barrow of the RCIPS. As jurisdictions race to acquire vital supplies from foreign suppliers, criminal elements will manipulate cross -border invoicing and banking processes to capitalise on this illicit activity. It is important for financial institutions to ensure their systems are capable of handling the analysis of these transactions, many of them now being done remotely. 

In the Cayman Islands, while the COVID-19 restrictions have had an impact on how regulators supervise and communicate with regulated entities, supervisors and law enforcement agencies continue to prioritise enhanced AML/CFT regulation and compliance. Entities that need to file a suspicious activity report with the Financial Reporting Authority can now do so electronically via email. Instructions are provided on the website of the Financial Reporting Authority. Persons who wish to donate to a charitable cause should verify that the charity collecting donations is registered with the Registrar of Non-Profit Organizations. 


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