September 23, 2020

Cyprus becomes “Equivalent Jurisdiction” under Cayman Money Laundering Regulations

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cyprus_2521946bBy Aki Corsoni-HusainAki and Corsoni-Husain, From Harneys

On 21 November 2014 the Cayman Islands gazetted an amendment to the Money Laundering Regulations (Regulations) to include Cyprus in the Third Schedule to the Regulations which lists countries and territories with equivalent legislation for anti-money laundering (AML) purposes.

Further, on 27 January 2015, the Cyprus Securities and Exchange Commission
publicised this to increase awareness of opportunities that may arise from this development.

This inclusion means that the Cayman Islands recognise Cyprus as a jurisdiction with AML legislation which is equivalent to that of the Cayman Islands.

Benefits as a result of inclusion

Firstly, this change means that Cypriot service providers to Cayman Islands funds, including fund administrators, brokers and custodians, are now able to undertake AML procedures functions and provide other client-onboarding services for Cayman Islands funds and other institutions on-island without needing to delegate those to group offices or outsource them to service providers in other jurisdictions which are deemed equivalent. This should greatly improve the efficiency with which services can be provided by Cypriot service providers.

Secondly, it is now sufficient under Cayman Islands law for Cypriot service providers to apply their own Cypriot AML procedures, rather than needing to comply with Cayman requirements when introducing a client to Cayman institutions, acting as fund administrator or making equivalent arrangements. In the context of Cayman Islands funds, the Board of Directors, General Partner or Trustee of the fund can now rely on the AML procedures of the Cypriot fund administrator and delegation of the AML functions to a Cypriot fund administrator will allow the fund to satisfy its Cayman Islands legal and regulatory obligations.

Thirdly, Cypriot firms can, in certain cases, now qualify as “eligible introducers” in Cayman, meaning that Cayman Islands institutions may rely on the Know Your Client process carried out by Cypriot service providers instead of carrying out separate procedures to comply with Cayman Islands law. Cayman Islands institutions may rely on the streamlined procedure in the following circumstances:

a. where a client remits funds from an account in his name with a Cypriot bank (known as the ‘wire transfer test’);

and

b. where a client is acting in the course of a regulated business which is based in or formed under the laws of Cyprus.

Lastly, the inclusion of Cyprus on this list means that Cypriot entities, businesses and customers will benefit from lower risk ratings when interacting with Cayman funds and other institutions.

Concluding remarks

This change will undoubtedly create a variety of opportunities for cooperation between business in Cyprus and the Cayman Islands and is likely to stimulate the market for Cayman funds and equivalent structures in Cyprus and its immediate neighbourhood.

SOURCE: http://www.harneys.com/publications/legal-updates/cyprus-becomes-equivalent-jurisdiction-under-cayman-money-laundering-regulations

IMAGE: www.telegraph.co.uk

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