Cayman Islands: The Anti-Money Laundering Regulations 2017

This client briefing addresses recent changes to the Cayman anti-money laundering framework - in particular those made by the Anti-Money Laundering Regulations, 2017 (AML Regulations), which came into force on 2 October 2017.

The Cayman anti-money laundering framework comprises:

  • the Proceeds of Crime Law (2017 Revision) (PCL), specifically Part V of that law, which came into force in May 2017;
  • the AML Regulations, made by the Cabinet pursuant to specific powers in the PCL, which repealed the old Money Laundering Regulations (2015 Revision);
  • the guidance notes (Guidance Notes) on the prevention and detection of money laundering and terrorist financing in the Cayman Islands dated August 2015, prepared by the Cayman Islands Monetary Authority (CIMA) pursuant to specific powers in the Monetary Authority Law. The Guidance Notes are currently being reviewed and will be updated in due course.

The thrust of the changes to the AML Regulations has been to close gaps that remained between Cayman's robust anti-money laundering regime and the Financial Action Task Force 2012 recommendations (FATF Recommendations).  The new AML Regulations do not re-shape the existing regime but they do introduce some important changes that need to be taken into account by those that are implementing Cayman anti-money laundering processes and procedures. The principal changes are as follows:

  • Expanded Scope – the AML Regulations continue to define their scope by reference to "relevant financial business" – save that the definition is now no longer contained in the AML Regulations but has been moved to the PCL.

- "Relevant financial business," the conduct of which brings a person (a financial services provider or FSP) within the scope of the AML Regulations, comprises (amongst others) business that is regulated in Cayman, such as banking business, trust business, insurance business, securities investment business, and regulated funds business.  Relevant financial business also includes certain non-regulated activities that are listed in a schedule to the PCL, including "trading for own account or for the account of customers in transferable securities." That list of non-regulated activities covered by the AML Regulations has now been expanded to include: (i) " otherwise investing, administering or managing funds or money on behalf of other persons;" and (ii) "underwriting and placement of life insurance and other investment related insurance."

- Whereas previously some unregulated funds were covered by the anti-money laundering regime, for example those that traded in transferable securities or some funds established as exempted limited partnerships (by virtue of the fact that the general partner was conducting securities investment business) the AML Regulations now make it clear that all unregulated as well as regulated investment entities are covered, as well as insurance entities and financing entities.

- As regards the unregulated business, the PCL provides that the Cabinet may assign to the Financial Reporting Authority (FRA), a public sector body or a self-regulatory body the responsibility of monitoring compliance with the AML Regulations by persons covered by the AML Regulations who are not otherwise subject to monitoring by CIMA (which has authority for the supervision of persons conducting regulated business).

  • Adoption of a risk-based approach – the other major change is that the AML Regulations now formally introduce the concept of a risk-based approach as part of the AML processes and procedures that must be adopted by FSPs.  An FSP is now required to take steps appropriate to the nature and size of its business to identify, assess, and understand its money laundering and terrorist financing risks in relation to a customer, the country or geographic area in which the customer resides or operates, the FSP's products, service and transactions, and the FSP's delivery channels.  We expect that the updated Guidance Notes will provide further detail regarding the practical application of the risk rating methodology.
  • Expansion of mandatory procedures –the old regulations required that FSPs maintain the following procedures:

(a) Customer identification procedures (KYC)

(b) Record-keeping procedures

(c) Internal reporting procedures (i.e. appointment of a money laundering reporting officer)

(d) Other procedures of internal control (including an appropriate internal audit function) and communication

(e) Designating a person, at management level, to be a compliance officer with responsibility for monitoring and ensuring internal compliance with the laws relating to money laundering

(f) Employee training and awareness in relation to AML regime and transactions by persons engaged in money laundering

The AML Regulations retain these procedures but now provide for two additional mandatory procedures:

(a) Employee screening procedures (for FSPs that have employees)

(b) Conducting sanction and FATF non-compliant territory checks

  • Simplified due diligence (general) – whereas previously FSPs could exempt certain low risk customers from KYC, the FATF Recommendations do not permit such exemptions.  The AML Regulations maintain the exempted categories contained in the old regulations but now specify that in respect of "Acceptable Applicants" (including a Cayman entity that is an FSP, a government or statutory body of a recognised foreign country, a foreign regulated entity or a company listed on a recognised stock exchange) such customers need to be identified but that verification documents are not necessary.  The AML Regulations also maintain the eligible introducers exemption but provide for enhanced written assurances from the eligible introducer, including an assurance that copies of identification and verification data obtained by the eligible introducer will be made available to the FSP on request.  An important point to note in respect of the new simplified due diligence provisions is that an assessment of lower risk is not something that the FSP can determine unilaterally anymore.  A finding as to low level of risk is now only valid if such finding is consistent with the findings of the Anti-Money Laundering Steering Group, being a body created under the PCL, or any other body designated in writing by the Cabinet in accordance with the PCL.
  • Simplified due diligence (SWIFT or Regulation 8 exemption) – one exempted category that has been heavily used in Cayman, in particular by the funds industry, is the category where the relationship is funded from a bank account in the name of the customer in a country recognised by Cayman as having an equivalent AML regime.  That, in itself, under the old regulations was capable of constituting the required evidence of identity. The AML Regulations modify this provision to maintain the original concept in a way that can be sustained under the FATF Recommendations by making it clear that basic customer identification details must be obtained upon receipt of payment, but that verification of customer due diligence may ordinarily be collected at a later stage, which must be before onward payment to the customer or to any other person.
  • "Beneficial owner" definition – the AML Regulations introduce the concept of "beneficial owners" (on whom KYC checks need to be completed where the customer is a legal person or legal arrangement).  The AML Regulations now contain a uniform and clearly identifiable definition that is aligned with the FATF Recommendations (and also FATCA and the Common Reporting Standards), being the natural person who ultimately owns or controls the customer including, but not restricted to: (i) in the case of a legal person other than a company whose securities are listed on a recognized stock exchange, a natural person who ultimately owns or controls, directly or indirectly, 10% or more of the shares or voting rights in the legal person; (ii) in the case of any other legal person, a natural person who otherwise exercises ultimate effective control over the management of the legal person; (iii) in the case of a legal arrangement, the trustee or other person who exercises ultimate effective control over the legal arrangement.
  • Increase in penalties – the AML Regulations provide that a person who contravenes the AML Regulations commits an offence and is liable on summary conviction to a fine of CI$500,000 (approximately US$600,000) or on conviction on indictment, to a fine and to imprisonment for two years.  This is a substantial increase in the penalties for breach of the AML Regulations.  Additionally, recent amendments to the Monetary Authority Law (and related regulations that are still under consultation) expand CIMA's power to impose administrative fines for non-compliance, including non-compliance with the AML Regulations.  The proposed regulations are still in draft form and we will circulate a briefing note summarising those powers in due course.
  • Deputy MLRO – the AML Regulations now provide for the appointment of a deputy Money Laundering Reporting Officer ensuring that a second person at managerial level will be involved in an FSP's anti-money laundering process.
  • Deletion of Schedule 3 – Schedule 3 of the old regulations, which set forth the list of countries recognised by Cayman as having an equivalent AML regime has been deleted from the AML Regulations.  The list of recognised countries now will be maintained electronically by the Anti-Money Laundering Steering Group, being a body created under the PCL, on the Cayman government website rather than as a stagnant list maintained in regulations, with the idea being that the list will be able to be updated more quickly.

On the whole, the AML Regulations introduce incremental but effective changes aimed at further strengthening the robustness of the Cayman anti-money laundering framework. We expect further clarification to be set forth in the updated Guidance Notes, a draft of which we anticipate will be circulated by CIMA for consultation in the next few weeks with a view to updated Guidance Notes being finalised and adopted later this year. 

The main areas that FSPs, in particular investment funds, that rely on third parties to satisfy their Cayman AML obligations should think about at this stage are (1) updating disclosures referencing the AML Regulations, PCL, and Schedule 3 Countries, as and when such disclosure documents are being updated; and (2) ensuring that the FSP has the ability to control onward payment to a customer or another party in the event that the third party conducting the AML checks is relying on the SWIFT exemption (to ensure that the verification now required by the AML Regulations may be completed before onward payment is made).

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.