The Cayman Islands has been made eligible for removal from the Financial Action Task Force’s (FATF) list of countries under increased monitoring for AML/CFT, subject to an onsite verification inspection that is expected to take place soon.
With confirmation by the FATF on June 23, 2023, that the Cayman Islands has fully satisfied the last remaining Recommended Action from the AML Action Plan agreed in 2021 with the FATF, the onsite inspection has been tentatively scheduled for either late August or early September. The inspection, for which preparations are already well underway, is a standard requirement of the delisting process and will assess how the action plan is operating in practice in the Cayman Islands as well as its sustainability.
Given that the FATF stated last year no further measures, other than those already identified in the action plan, will be required for the removal of the Cayman Islands from what is commonly referred to as its Grey List, this news has been warmly received by the Cayman Islands financial services industry. With the likely timing that has been suggested for the inspection, the Cayman Islands would then await official confirmation of delisting, potentially in October 2023 at the next FATF Plenary.
This positive development is in no small part the result of the considerable efforts of the Cayman Islands government since the jurisdiction was placed under increased monitoring by the FATF in February 2021, due to a perceived lack of enforcement actions and fines under the Cayman AML/CFT regulatory framework. Attending the FATF plenary last week in Paris and representing the Cayman Islands were Attorney General, the Hon. Samuel Bulgin, KC; Minister of Financial Services and Commerce, the Hon. André Ebanks; and Francis Arana, Head of the Anti-Money Laundering Unit.
“Satisfying all of the 63 recommended actions is a major step towards the Cayman Islands being delisted but, as is the case for other listed countries that met this milestone, there is one more step to complete, and all relevant stakeholders need to remain focused,” Minister Ebanks said in a statement looking forward to continued cooperation with the FATF Americas Joint Group. The Attorney General also underlined the rigorous nature of the FATF’s process, which he said was in place for good reason and to ensure local authorities can effectively deter, detect, investigate and prosecute serious crimes.
Local industry stakeholders will also have some involvement in the onsite inspection process, with in-person meetings to be scheduled with FATF assessors. The inspection will aim to ensure that the implementation of the AML/CFT reforms in the Cayman Islands has not only begun, but is being sustained and that the necessary political commitment remains in place to sustain implementation in the future, the FATF stated.
While the listing of the Cayman Islands among jurisdictions under increased monitoring for AML/CFT purposes has not had any direct impact on the investment funds sector, in terms of requiring enhanced levels of due diligence, the situation has created an element of uncertainty surrounding the jurisdiction and the technical aspects regarding its listing and the process for removal. The Cayman Islands has demonstrated for many years the strength of its commitment towards transparency of tax information and maintaining compliance with evolving global standards, as recognised by the OECD and a swift, positive resolution to this issue is now anticipated. If you have any questions then please don’t hesitate to get in touch.
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