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
Further, on 27 January 2015, the Cyprus Securities and Exchange
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
where a client remits funds from an account in his name with a
Cypriot bank (known as the 'wire transfer test');
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
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
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.
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