June 6, 2020

Cayman: LA Bills to further enhance Cayman’s AML/CFT Regime


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Hon Tara Rivers

Government is presenting 11 bills, to further strengthen Cayman’s anti-money laundering and counter financing of terrorism (AML/CFT) regime, to the Legislative Assembly on Wednesday, 24 July. There will also be two separate bills to handle administrative matters for the Auditors Oversight Authority (AOA) and the Cayman Islands Monetary Authority (CIMA).

During the fifth meeting of the 2018-2019 session, these AML/CFT-related bills will be debated in the LA:

·         Banks and Trust Companies (Amendment) Bill, 2019;

·         Trusts (Amendment) (No. 2) Bill, 2019;

·         The Companies (Amendment) Bill, 2019;

·         The Limited Liability Companies (Amendment) Bill, 2019;

·         The Limited Liability Partnership (Amendment) Bill, 2019;

·         Mutual Funds (Amendment) Bill, 2019;

·         Insurance (Amendment) Bill, 2019;

·         Building Societies (Amendment) Bill, 2019;

·         Cooperative Societies (Amendment) Bill, 2019;

·         Money Services (Amendment) Bill, 2019;

·         Trade and Business Licensing (Amendment) Bill, 2019

Financial Services Minister Tara Rivers noted that ten of the bills are being presented by the Ministry of Financial Services.

‘These bills will strengthen our already extensive AML/CFT regime. The Government is committed to addressing the recommendations outlined in the CFATF fourth round mutual evaluation report to further cement our standing as a responsible and responsive jurisdiction in the global fight against money laundering and terrorist financing’, Minister Rivers said.

The Banks and Trust Companies (Amendment) Bill, 2019 is intended to ensure that appropriate transparency measures, such as disclosure requirements, are in place for trusts. For the purpose of Basel II, Pillar 3 Market Disclosures, the bill also would empower CIMA to require a licensee holding a licence, in order to establish a banking business or a Cayman banking group, to make public disclosures.

The Trusts (Amendment) (No. 2) Bill, 2019 seeks to insert provisions into the Trusts Law (2018 Revision) that: require trustees and the Registrar of Trusts to share information on registered trusts with other competent authorities; provide sanctions for failure to provide competent authorities with required information; and empower Cabinet to make regulations.

The Companies (Amendment) Bill, 2019 is intended to require a company’s basic information, including a list of directors, to be maintained and publicly available. The bill also puts forward stiffer penalties for failure to comply with beneficial ownership obligations under the law.

The Limited Liability Companies (Amendment) Bill, 2019 would ensure that all basic information, including a list of directors, for limited liability companies (LLCs) is publicly available. The bill also would impose sanctions to companies for failure to maintain up-to-date information.

The Limited Liability Partnership (Amendment) Bill, 2019 is similar to the companies and LLC bills as it would require all basic information on a limited liability partnership (LLP) to be available at the LLP’s registered office. The bill also puts forward stiffer sanctions for failure to maintain up-to-date beneficial ownership information.

The Mutual Funds (Amendment) Bill, 2019 and the Insurance (Amendment) Bill, 2019 would sanction licensees, who also provide company management services, where they fail to maintain current beneficial ownership information for their clients. The mutual funds bill also calls for auditors and other professionals who become aware of this failure to notify the relevant authority.

The Building Societies (Amendment) Bill, 2019 and the Cooperative Societies (Amendment) Bill, 2019 would prevent persons from holding (or being the beneficial owner of) a significant controlling interest, or holding a management function, in a financial institution if they are suspected of criminal activity.

The Money Services (Amendment) Bill, 2019 would require money service businesses to monitor their agents’ compliance with their AML/CFT programmes and ensure these businesses meet AML/CFT requirements.

Cayman’s AML/CFT regime would also be affected by the Trade and Business Licensing (Amendment) Bill, 2019, being put forward by the Ministry of Commerce, to amend the Trade and Business Licensing (TBL) Law to require the TBL Board to consider an applicant’s compliance with AML/CFT obligations before licences are granted, renewed or revoked.

The bills are intended to help address the Caribbean Financial Action Task Force (CFATF)’s March 2019 report on Cayman’s AML/CFT regime. The report outlines certain recommended actions to be taken by the Cayman Islands to strengthen the AML/CFT regime. The jurisdiction is under a one-year “Observation Period” by the FATF, ending February 2020, in which it is expected to correct strategic AML/CFT deficiencies. The FATF will review the progress made by the Cayman Islands and, at its June 2020 Plenary, determine if the recommended actions have been taken.

If the degree and quality of progress made by the Cayman Islands do not satisfy the recommended actions, the FATF will issue a public statement regarding the jurisdiction’s AML/CFT deficiencies, develop an action plan, and monitor progress against the action plan.

In June, Cayman’s AML/CFT regime was strengthened by the passage of the Proceeds of Crime (Amendment) Law, 2019; Securities Investment Business (Amendment) Law, 2019; and the Directors Registration and Licensing (Amendment) Law, 2019.

Outside of the AML/CFT-related bills, this month’s LA meeting also will see debate over the Auditors Oversight (Amendment) Bill, 2019 and Monetary Authority (Amendment) (No.2) Bill, 2019.

The Auditors Oversight (Amendment) Bill, 2019 seeks to amend the financial year of the Auditors Oversight Authority Law (2017 Revision) to align with the financial year in the Public Management Finance Law (2018 Revision) and remove inconsistencies.

The Monetary Authority (Amendment) (No.2) Bill, 2019 also seeks to amend the financial year in the Monetary Authority Law (2018 Revision) to align with the financial year in the Public Management Finance Law (2018 Revision) and eliminate inconsistencies. In addition, the bill proposes to authorise CIMA as the facilitator of business continuity and disaster recovery, following a natural disaster, with the power to exempt any affected person or class of persons from any relevant regulatory provisions for a period and under such conditions as CIMA deems suitable. 

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