Cayman Islands
Answer ... It is of the upmost importance that entities and individuals with interests in the Cayman Islands:
- keep up to date with regulatory changes; and
- acknowledge new trends and typologies that arise in light of dynamic market conditions.
These should not only be understood, but also analysed within the context of current AML compliance programmes to ascertain whether any policies, procedures, systems and controls may need to be revised as a consequence.
To facilitate the implementation of a robust AML compliance programme, its effectiveness should be continually assessed. While policies and procedures may be constructed appropriately and conform to the regulatory framework, the programme will not be effective if the processes, systems and controls in place do not adequately capture the applicable requirements and obligations. Testing effectiveness is thus crucial to the sustained success of an AML compliance programme and where deficiencies are found, a remediation plan should be established.
Cayman Islands
Answer ... In the case of any global systemic shock, a number of threats and trends that can emerge. The COVID-19 pandemic was no exception: due to disruptions to business proceedings, criminals were able to exploit operational vulnerabilities in a number of ways.
As commerce migrated from the physical space to the virtual space, criminals diversified the means by which they conduct illicit activities – as reflected in the use of new online schemes and channels to launder the proceeds of crime. Furthermore, legitimate businesses in distress and goods/services that have become illiquid have been subjected to criminal infiltration, as they can be used as a front to hide fraudulent proceeds and transfers.
From the perspective of the Cayman Islands, the risks pertaining to exploitation in the manufacturing and trade sectors have been minimal (given the jurisdiction’s geographical features). However, Cayman’s thriving financial services sector has been and will remain vulnerable, given the high level of cross-border business and the volumes of financial transactions that occur.
For remote business, which makes up a significant percentage of transactions in the Cayman Islands, there is always a risk that standard customer due diligence obligations may be circumvented – specifically in relation to verification (eg, due to the restrictions in social distancing during COVID-19, certifications of identification documents could not occur).
The Cayman Islands Monetary Authority (CIMA) was quick to recognise the significant challenges faced by the financial services industry in relation to verifying customers and provided helpful guidance on mechanisms that could be temporarily established in order to ensure that customers could be appropriately identified, verified and risk rated. Examples included:
- the use of video conferencing with underlying customers;
- the certification of documents through the use of ‘selfies’; and
- receipt of residential address statements in electronic form.
Cayman Islands
Answer ... As the Cayman Islands is a British overseas territory with English as its official language, all AML laws and rulemaking instruments are in English. The applicable acts, regulations and guidance notes can be found on CIMA’s website at www.cima.ky/.
For guidance notes and information pertaining to reporting suspicious activity and sanctions breaches, see the Financial Reporting Authority’s website at www.fra.gov.ky/.