Cayman Islands: GIR Know How Anti-Money Laundering

Money laundering

1. What laws in your jurisdiction prohibit money laundering?

The primary law prohibiting money laundering in the Cayman Islands is the Proceeds of Crime Act (As Revised) (the POCA). The POCA defines money laundering and establishes offences relating to money laundering. There are no state, provincial or local laws separate from national laws in the Cayman Islands.

Other laws that assist in combating money laundering or similar, such as proliferation or terrorist financing, include:

• The Terrorism Act (As Revised) treats entering into or becoming concerned in an arrangement that facilitates the retention or control of terrorist property, whether by concealment, removal from the jurisdiction or transfer to nominees, as a money laundering offence.
• The Proliferation Financing (Prohibition) Act (As Revised) treats (i) providing funds and economic resources to fund unauthorised proliferation activities, and (ii) entering into or becoming concerned in an arrangement that facilitates the acquisition, retention, use or control of funds and economic resources to fund unauthorised proliferation activities, as a money laundering offence.
• The Misuse of Drugs Act (As Revised) criminalises and addresses dealing with proceeds from drug trafficking.
• The Anti-Corruption Act (As Revised) provides that the provisions of the POCA shall apply in relation to the proceeds of a corruption offence.
• The Anti-Money Laundering Regulations (As Revised) (the Regulations) provide for the implementation of anti-money laundering procedures by persons engaged in "relevant financial business" (as defined under the POCA).

2. What must the government prove to establish a criminal violation of the money laundering laws?

Under the POCA, the government must prove that the property involved is "criminal property". 'Criminal property' is defined by section 144(3) of the POCA, which states that property is criminal property if (a) it constitutes a person's benefit from a criminal conduct or it represents such a benefit (in whole or part and whether directly or indirectly), and (b) the alleged offender knows or suspects that it constitutes or represents such a benefit, and includes terrorist property

Further, the government must prove the remaining elements of the relevant offence. Section 144(10) of the POCA provides that money laundering is an act that:

1. constitutes an offence under sections 133, 134 or 135. Section 133 makes it a money laundering offence if a person conceals, disguises, converts, transfers or removes 'criminal property'. Section 134 makes it a money laundering offence if a person enters into or becomes concerned in an arrangement that person knows or suspects facilitates the acquisition, retention, use or control of 'criminal property'. Section 135 makes it a money laundering offence for a person to acquire, use or have possession of 'criminal property';
2. constitutes an attempt, conspiracy or incitement to commit an offence set out in sections 133, 134 or 135;
3. constitutes aiding, abetting, counselling or procuring the commission of an offence specified in sections 133, 134 or 135; or
4. would constitute an offence specified in paragraph (a), (b) or (c) above if done in the Cayman Islands.

The standard of proof is the criminal prosecution standard of proof (ie, beyond reasonable doubt).

3. What are the predicate offences to money laundering? Do they include foreign crimes and tax offences?

The POCA adopts a dual-criminality approach with respect to predicate offences to money laundering. Sections 133, 134 and 135 define money laundering by references to actions taken in respect of "criminal property". Where "criminal property" constitutes or represents a person's benefit (in whole, part, directly or indirectly) from "criminal conduct" and the offender knows or suspects that it constitutes or represents such a benefit; and where "criminal conduct" covers any offence committed in the Cayman Islands or which would have constituted an offence if committed in the Cayman Islands (ie, a dual criminality test).

Revised). That section provides that a person commits an offence if that person, with intent to defraud the government:

• wilfully makes, delivers or causes false or fraudulent information to be made to a person employed in the public service relating to the collection of money for the purposes of general revenue;
• wilfully omits information required to be provided to a person employed in the public services relating to the collection of money for the purposes of general revenue, where required by law; or
• wilfully obstructs, hinders, intimidates or resists a person employed in the public service in the collection of money for the purposes of general revenue.

4. Is there extraterritorial jurisdiction for violations of your jurisdiction's money laundering laws?

No, although that does not mean actions that occur overseas are irrelevant. A Cayman Islands established or registered entity or legal arrangement can be held accountable for the actions of its officers, employees and agents that are overseas on the basis that entity or legal arrangement is within the Cayman Islands jurisdiction.

However, the authorities in the Cayman Islands cannot, in the ordinary course, enforce their authority outside of the jurisdiction. However, they can, and do, give and receive information and mutual legal assistance in relation to criminal matters from certain specific countries under the Criminal Justice (International Cooperation) Act (As Revised) and the Mutual Legal Assistance (United States of America) Act (As Revised). Such legal assistance can include taking and providing evidence, executing searches and seizures, examination of objects and sites, identifying or tracing proceeds or property, freezing criminal property, assisting with forfeiture and restitution and facilitating the voluntary transfer of witnesses.

5. Is there corporate criminal liability for money laundering offences, or is liability limited to individuals?

There is corporate criminal liability for money laundering offences under the POCA.

Section 142(3) provides for criminal liability for partnerships and other unincorporated associations. It provides that:

The Regulations also provide for corporate criminal liability for breaches of the regulations. Regulations 57(1) and 57(3) are worded similarly to sections 142(1) and 142(3) of the POCA.

The Anti-Corruption Act, Terrorism Act, Proliferation Financing (Prohibition) Act, Misuse of Drugs Act all contain similar language providing for corporate criminal liability.

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Originally Published by GIR

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.