Evaluation of Cayman Islands
Hon. Samuel Bulgin, QC JP
Chairman, Anti-Money Laundering Steering Group
As part of the Caribbean Financial Action Task Force (CFATF) Mutual Evaluation process, a team of examiners will be in the Cayman Islands from 4th-15th December 2017 to assess the jurisdiction's efforts in combating money laundering and the financing of terrorism and proliferation (of weapons of mass destruction).
The on-site visit is an opportunity for the Cayman Islands to demonstrate that it is in compliance with the Financial Action Task Force's (FATF's) 40 recommendations and it's Methodology for Assessing Compliance with the FATF Recommendations and Effectiveness of AML/CFT Systems (Methodology).
There are two components to the 4th Round Mutual Evaluation (technical compliance and effectiveness), but the focus of the on-site visit will be on the "effectiveness", as there is already ongoing engagement between the Cayman Islands and the examiners on technical compliance.
Accordingly, they will be examining the extent to which 11 Immediate Outcomes have been achieved that is central to a robust AML/CFT framework. This is a new aspect of the 4th Round Mutual Evaluation process that came into effect when the Methodology was published in February 2013.
During the two-week visit, the assessment team is scheduled to meet not only with representatives from all relevant public sector competent authorities involved in Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CFT), but also with private sector representatives from the various financial institutions (FIs) and designated non-financial businesses and professions (DNFBPs). These include Attorneys, dealers of precious metals and stones and real estate dealers. Meetings with FIs and DNFBPs will focus particularly on the AML/CFT measures they have been implemented that would demonstrate effectiveness.
Of critical importance is the extent to which these stakeholders have assessed their own money laundering risks or vulnerabilities, taking into consideration the Results of the 2015 Cayman Islands National Risk Assessment Relating to Money Laundering, Terrorism Financing and Proliferation Financing and the extent to which FIs and DNFBPs are taking mitigating measures commensurate with their risks.
This includes having (1) documented policies and procedures in place that are in line with the Anti-Money Laundering Regulations, 2017; and (2) supporting information and data to demonstrate that robust AML/CFT procedures are being carried out.
The Portfolio of Legal Affairs, the Ministry of Financial Services, and CIMA have been working with the public sector agencies and private sector stakeholders to get the jurisdiction in a state of readiness for the review.
The 3rd Round Mutual Evaluation Report, 2007 observed: "There is a strong compliance culture in the Cayman Islands." While significant changes have been made to the FATF standards in 2012 and 2013, the culture of compliance has driven the Cayman Islands to recalibrate its AML/CFT regime accordingly.
Even at this early phase of The Cayman Islands Anti-Money Laundering and Counter Terrorist Financing Strategy 2017-2021, substantial changes have been made to the legal and institutional framework for AML/CFT.
Once the review is completed, the assessment team will produce a series of draft Reports of the Cayman Islands Mutual Evaluation Reports (MERs) for review and refinement prior to its eventual adoption by the CFATF Plenary in November 2018. Once published, it is expected that the MER will validate the jurisdiction's strengths in combatting money laundering and terrorist financing. It will also make recommendations of areas for further improvement.