Cayman Islands: Further Important Changes To The Cayman Islands AML Regime

Last Updated: 6 February 2018
Article by Martin Livingston, Tim Dawson and Adam Huckle
Most Read Contributor in Cayman Islands, November 2018

A number of major developments impacted the Cayman Islands AML regime in December 2017, as the CFATF fourth round mutual evaluation of the Cayman Islands was being conducted.  For background on the introduction of the Anti-Money Laundering Regulations, 2017 ("AML Regulations") in November 2017, please see our prior client updates:  The Anti-Money Laundering Regulations, 2017 and  New AML Regulations: Application to Insurance & Unregulated Investment Entities

This update provides a high-level summary of the most recent developments.  If you would like further information, please contact one of the authors, or your usual Maples and Calder contact.

Revisions to the AML / CFT Guidance Notes

The Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands ("Guidance Notes") were revised and re-issued by the Cayman Islands Monetary Authority ("CIMA") in December 2017.  The Guidance Notes support the interpretation and application of the AML Regulations and contain sector specific guidance. 

Without a transitional period under the AML Regulations for pre-existing in-scope entities, the issuance of the Guidance Notes was critically important in determining practical compliance.  Accordingly, clients should review their existing AML / CFT policies and procedures (or those of their delegate) to ensure they adhere to updated current requirements.

Many of the revisions in the Guidance Notes flow from the new, or revised, provisions of the AML Regulations (e.g. risk-based assessments, enhanced due diligence on PEPs, etc.). 

However, some changes are incongruous with the AML Regulations or other parts of the Guidance Notes and have introduced some uncertainty.  The key points to note are:

(a)  Managed financial service providers (e.g. banks, investment funds, etc.) are still permitted to delegate or, in certain circumstances, rely on, a suitable party to maintain all of the AML / CFT procedures and functions.  This includes the Compliance Officer ("AMLCO"), Money Laundering Reporting Officer ("MLRO") and Deputy MLRO roles.  The prior conditions for delegation remain and reference is also made to the requirements under CIMA's Statement of Guidance on Outsourcing.  As such, a separately nominated AMLCO or MLRO is not required when delegating the functions.   

(b)  The Guidance Notes provide that a gap analysis (assessing lesser AML standards of a different jurisdiction and remediating to Cayman standards) should be undertaken when delegating and/or relying on an eligible introduction.  However, the Guidance Notes also provide that CIMA will regard a delegate as complying with the AML Regulations and Guidance Notes, when the delegate is subject to the AML regime of a jurisdiction listed by the Cayman Islands AML Steering Group as having equivalent AML legislation to the Cayman Islands (an "AMLSG Jurisdiction", formerly known as Schedule 3 jurisdictions).  Accordingly, a gap analysis should only be required where the delegation may be to a party that is either not subject to the AML regime of, or based in, an AMLSG Jurisdiction.  While there is a good argument that the same logic should apply to eligible introductions, unfortunately it is unclear, given the gap analysis language in the Guidance Notes, whether CIMA takes that view. 

(c)  Under the old regulations, a commonly used exception to conducting full due diligence was when a payment was made from a bank account in the name of the applicant for business (e.g. a fund investor) with a bank regulated in an AMLSG Jurisdiction.  The new iteration of this exception (now categorised as a type of "simplified due diligence") under the AML Regulations now states it cannot be used in certain circumstances, i.e. there should be a collection of due diligence evidence.  One of those circumstances is the occurrence of an "onward payment" to the applicant for business or a third party.  In the consultation feedback with CIMA, it appeared that simplified due diligence would be permitted as long as payment was only made back to the same bank account of the applicant for business, as that was understood not to constitute "onward payment", but no specific guidance on the point was issued.  As no guidance was issued that indicates to the contrary, we consider that payments to an investor's account at the same originating bank would not constitute onward payment and therefore simplified due diligence should be permitted.  This type of due diligence should however only be used if there is assessed to be a low level of risk.  We hope to get further clarity from CIMA on this point.

(d)  There is a lack of sector specific guidance for some of the industries that are newly (or previously were not fully) subject to the AML Regulations, including for unregulated investment entities, structured finance vehicles, high-net worth dealers, and law and accounting firms.  This guidance will need to be developed shortly in order for such businesses to understand the extent of their AML (particularly KYC) obligations. 

Given the lack of a transitional period for pre-existing in-scope entities, we recommend that AML Procedures and / or delegation / reliance arrangements are reviewed to ensure that all functions are being undertaken in accordance with the new requirements.  For entities that are newly subject to the AML Regulations, a transitional period has been granted until 31 May 2018 in order to implement a delegation / reliance arrangement.  It is important to note that KYC remediation will need to be performed for existing customers of these entities before that deadline.

CIMA Administrative Fine Regime

The Monetary Authority (Amendment) Law, 2016 (the "MA Law") and the Monetary Authority (Administrative Fines) Regulations, 2017 (the "MA Regulations"), both came into force in December 2017.  The MA Law gives CIMA the power to impose administrative fines for breaches committed by persons (entities and individuals) subject to Cayman Islands regulatory laws (including CIMA Rules) or the AML Regulations.  This will give CIMA equivalent powers to those that are customary for onshore regulators. 

Breaches are to be categorised as being "minor", "serious" or "very serious".  There will be a sliding scale of fines from CI$5,000 for minor breaches to CI$100,000 for individuals and CI$1 million for entities for very serious breaches.  Fines for ongoing minor breaches can be applied at intervals on a continuing basis up to a CI$20,000 cap. 

CIMA will have six months from becoming aware of a minor breach, or having received information from which the fact of the breach can be reasonably inferred, to impose a fine.  There is a two year time limit in respect of the imposition of fines for serious or very serious breaches.

Fines may be imposed even if the relevant breach is not a criminal offence, though where a breach is also an offence the imposition of a fine will not preclude prosecution for that offence (or be limited by the penalty for that offence), and likewise any prosecution will not preclude the imposition of administrative fines or penalties.

The procedures relating to the imposition of the fines, and the types of laws / provisions for which fines may be imposed, are set out under the MA Regulations.  Among other things, the MA Regulations outline:

(a)  the criteria that CIMA must adopt when issuing breach notices, considering or reconsidering matters if there is cause and imposing discretionary fines;

(b)  when a party that has received a fine notice for a fixed fine may apply to the Management Committee of CIMA to review the original decision; and

(c)  when a party that has received a fine notice for a discretionary fine may apply to the Grand Court for leave to appeal against the original decision.

Schedule 1 of the MA Regulations sets out the prescribed regulatory law provisions and corresponding breach categories.  In the initial phase, only provisions of the AML Regulations are included in the Schedule which means CIMA's powers are currently limited to the imposition of fines for breaches of the AML Regulations.  It is expected that this will be broadened in the future to include breaches of other Regulatory Laws and ancillary Rules.

Designated Non-Financial Businesses and Professions

On 13 December 2017, amendments were made to the AML Regulations to clarify and expand their application to certain Designated Non-Financial Businesses and Professions ("DNFBPs"), including precious metal and stone dealers, real estate agents and brokers, as well as law and accounting / audit firms and sole practitioners.

The Department of Commerce and Investment is designated as the Supervisory Authority for AML purposes for the real estate brokers and precious metal and stone dealers.  The Cayman Islands Institute of Professional Accountants is the Supervisory Authority for the accounting / audit industry, and a body has yet to be assigned by Cabinet for the law firms and sole legal practitioners. 

Supervisory Authorities may respectively issue guidance and shall develop a registration procedure in order to be able to monitor DNFBPs.  Currently, DNFBPs shall have 90 days from the date of the amendment to register with their respective Supervisory Authority by filing a Declaration, but this may very well be extended, as the Supervisory Authorities have yet to establish their processes, and / or have yet to be designated (i.e. for law firms). 

A DNFBP can be de-registered by the Supervisory Authority for breach of the AML Regulations (where not otherwise addressed by an administrative fine) or where the DNFBP or a connected person (including an officer or operator) is not fit and proper, or has ceased business.  Certain factors will be considered by the Supervisory Authority to determine fitness and propriety.

Supervisory Authorities also have the power to (i) request disclosure of information or documentation (save for protected documentation, as defined) from the DNFBP and (ii) impose fines for breach of the AML Regulations.  Fines can be up to $100,000 for natural persons or up to $250,000 for legal persons.  Imposing a fine precludes a criminal prosecution for an offence, and vice versa. 

The Supervisory Authority must provide a written notice of the intention to impose a fine and the DNFBP has 30 days to rectify the breach or object.  Appeals can be made to the Grand Court. 

Tax Evasion as a Money Laundering Predicate Offence

The Penal Code (2017 Revision) was amended on 1 December 2017.  The amendment creates a tax offence in the Cayman Islands, which forms a predicate for money laundering.  In conjunction with the dual criminality provisions under the Proceeds of Crime Law (2017 Revision) (whereby criminal conduct, for the purposes of money laundering, can include conduct committed overseas, as long as it would be an offence under Cayman law), this new offence reinforces the fact that foreign tax evasion and equivalent tax crimes are reportable in the Cayman Islands. 

Broadly, it is an offence when a person, with intent to defraud the Cayman Islands Government, wilfully (i) provides false or fraudulent information to a collector of general revenue; (ii) omits information required to be provided to a collector of general revenue; or (iii) obstructs, hinders, intimidates or resists a collector of general revenue.

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.

Martin Livingston
Similar Articles
Relevancy Powered by MondaqAI
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”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions