The Cayman Islands has witnessed a continuous increase in the number of administrative fines handed down by the Cayman Islands Monetary Authority (CIMA), subsequent to the enactment of the Monetary Authority (Administrative Fines) (Amendment) Regulations (2022 Revision) (the "Fines Regulations").1
This trend was notably reinforced in September 2025, when CIMA imposed substantial fines on Blacktower (Cayman) Ltd. and Blacktower Financial Management (International) Limited for breaches of the Anti-Money Laundering Regulations ("AMLRs") and related regulatory requirements, details of which are publicly available2. These recent enforcement actions highlight CIMA's active and robust approach to supervision and enforcement, demonstrating its commitment to upholding high standards of regulatory compliance. CIMA, acting as a powerful watchdog over the regulation and supervision of financial services within the Cayman Islands, has previously shown its teeth in the level of fines that it has imposed, the largest of which was in excess of KYD$4 million in 2021.3
From a local and international perspective, the role of CIMA demonstrates that the Cayman Islands has a high level of regulation and a careful regulator that is actively engaged in protecting the integrity of its regulatory space. With the potential for serious consequences for breaches of the ever-growing regulatory landscape, it is important that all persons (entities and individuals) regulated under these laws understand their obligations.
Breach and Fine Notices
Part VIA of the Monetary Authority Act (2020 Revision) as amended (the "Monetary Authority Act") allows CIMA to impose administrative fines upon individuals, bodies corporate, partnerships, limited liability partnerships, exempted limited partnerships, unincorporated associations or any other person in respect of breaches of provisions set out in Schedule 1 of the Fines Regulations.4 The administrative fines regime is comprised of the Monetary Authority Act and the Fines Regulations.5 Breaches are categorised as being minor, serious or very serious. CIMA has a period of six months from the time it becomes aware of a minor breach and two years from the time it becomes aware of a serious or a very serious breach to impose a fine.6 There is a sliding scale of fines from KYD$5,000 for minor breaches to KYD$100,000 for individuals and KYD$1 million for entities for very serious breaches.
Prior to imposing a fine, CIMA is required to give the party a breach notice pursuant to Regulation 11 of the Fines Regulations. The regulated entity thereafter must be given at least 30 days to reply to the breach notice and to rectify a "minor" breach to CIMA's satisfaction. If CIMA is not satisfied that a minor breach has been rectified, it is required to impose a fine. For "serious" or "very serious" breaches, CIMA has the discretion whether to impose a fine, and in what amount up to the cap for the relevant category. CIMA is required by Regulation 12 of the Fines Regulations to consider all matters raised in the reply before a fine notice is issued. It is only after having delivered a breach notice and considered a regulated entity's reply that CIMA can issue a fine notice. In determining the fine amount for a serious or very serious breach, CIMA is required to consider a number of criteria.7
The Criteria for Making an Administrative Fine
In determining the fine amount for breaches described as serious or very serious, CIMA has discretion in deciding whether to impose any fine, and the amount of that fine. To the extent that CIMA considers it relevant to the making of a decision, it is required to consider all relevant factors8 including the following principles,9 in order of importance:
- the need to promote and maintain a sound financial system in the Islands;
- the disgorgement principle;10
- the disciplinary principle;11and
- the deterrence principle.12
CIMA is also required, as a public body, to make its decisions in a lawful, rational, proportionate and procedurally fair manner.13
Early Settlement of Administrative Fines
Early settlement is available to parties to encourage early resolution through voluntary settlement of administrative fines. A person may enter into an early settlement prior to or after receiving a breach notice. CIMA may, but need not, negotiate with a party to attempt to reach a discount agreement. CIMA is not permitted to discount any component of the usual fine that represents the application of the disgorgement principle. CIMA and the person on whom a penalty is to be imposed may seek to agree the amount of any financial penalty and other terms. In recognition of the benefits of such agreements, the amount of the financial penalty which might otherwise have been payable will be reduced to reflect the stage at which CIMA and the person concerned reached an agreement. In cases where early settlement is agreed upon, a discount may be applied by CIMA up to a maximum of 40%.14Where a person enters into a discount agreement, that person may not appeal against the decision of CIMA to issue the fine or the fine amount, if the fine is no more than the amount agreed to in the discount agreement.
A key factor to be considered by a person intending to make an early settlement agreement is that it is expected to admit the breach and/or breaches at the outset of making a request for an early settlement, and to submit any mitigating factors upon which it seeks to rely. A fully executed discount agreement is thereafter binding on CIMA and the person, and the terms of the early settlement will usually be made public (save in exceptional circumstances or at the discretion of CIMA). The public release will further provide an account of the admitted breaches and all relevant details including the name of the person, the breaches, an investigations summary, the fines imposed, and any discount applied.
Reviews and Appeals
A person may apply to CIMA for an internal review of a decision to impose a fine notice relating to a fixed fine within 30 days of receipt of the notice. Thereafter, CIMA management committee is required to consider the application within 20 days of receipt and provide a notice of its decision within 10 days after deciding on the application.
A person may apply to the Grand Court of the Cayman Islands for leave to appeal against a decision by CIMA to impose a discretionary fine within 30 days after receiving the fine notice. The Grand Court may grant leave to appeal if the person has grounds for seeking judicial review of the decision (as considered further below) or if the decision was made with lack of proportionality or was not rational.15
CIMA may apply to the Grand Court for an order that the appellant provide sufficient security for costs and for a stay of the appeal proceedings until security is provided.16 After hearing the appeal, the Grand Court may (i) affirm, set aside or vary the original decision; or (ii) set aside the original decision and remit the matter back to CIMA for its consideration, subject to the directions as the Grand Court sees fit.17
Judicial Review Procedure for an Administrative Fine
The procedures and process for making a judicial review claim for an administrative fine is the same as the standard judicial review procedure in the Cayman Islands as set out in Order 53 of the Grand Court Rules Vol 1 – Orders – (2023 Revision) (as amended).18
Recent Enforcement Actions: Practical Lessons for Regulated Entities
On 29 September 2025, the CIMA imposed significant discretionary administrative fines on two entities: Blacktower (Cayman) Ltd. (KYD$85,043.84) and Blacktower Financial Management (International) Limited (KYD$230,038.72). These actions underscore CIMA's continued vigilance and the evolving expectations for regulated entities under AMLRs and related regulatory frameworks.
Key breaches identified included:
- Failure to scrutinise customer transactions and ensure consistency with customer profiles.
- Inadequate record keeping, particularly regarding transaction monitoring and retention of analysis results.
- Deficiencies in maintaining robust transaction monitoring systems.
- Failure to perform enhanced due diligence in instances of unusual or suspicious activity.
- Insufficient client disclosures under the Securities Investment Business (Conduct of Business) Regulations.
These findings, resulting from onsite inspections, reinforce the necessity for licensees to implement effective AML/CFT/PF and Sanctions policies, maintain comprehensive transaction monitoring systems, and adhere strictly to record keeping and due diligence obligations. The cases also highlight the importance of timely and sufficient client disclosures to enable informed decision-making.
Practical Compliance Takeaways:
- Entities must ensure that transaction monitoring systems are not only in place but are actively and consistently used to scrutinise customer activity.
- Record keeping must be thorough, with retention of all relevant analysis for the required statutory period.
- Enhanced due diligence is essential whenever unusual or suspicious activity is detected.
- Regulatory obligations extend beyond AML/CFT/PF to include client communication and disclosure requirements.
CIMA's enforcement actions demonstrate that breaches, whether minor, serious, or very serious, will be met with appropriate penalties, and that the Authority remains committed to upholding the integrity of the Cayman Islands' financial services sector.
Conclusion
The recent 2025 fines imposed by CIMA illustrate, its robust approach to enforcement and its commitment to safeguarding the Cayman Islands' financial services regulatory landscape. These cases serve as a reminder that regulated entities must maintain high standards of compliance, not only to avoid penalties but to support the jurisdiction's reputation for regulatory excellence. As CIMA continues to exercise its enforcement powers, entities should regularly review and strengthen their internal controls, policies, and procedures to ensure ongoing compliance with all applicable laws and regulations.
Footnotes
1. The Fines Regulations expanded the power of CIMA to impose administrative fines upon individuals and entities licensed and regulated in the Cayman Islands in respect of breaches of the provisions as set out in Schedule 1 of the Fines Regulations.
2. https://www.cima.ky/administrative-fines
3. Public Notice 13 May 2021, CIMA fined Intertrust Corporate Services (Cayman) Limited ("Intertrust") KYD$4,232,607.50 see https://www.cima.ky/administrative-fine-intertrust-corporate-services-cayman-limited
4. Schedule 1 of the Fines Regulations lists the "prescribed provisions" and "breach categories" in respect of which administrative fines can be levied.
5. See also CIMA's Enforcement Manual (2018), and Enforcement Manual (Procedure for Administering Administrative Fines) (2019).
6. The limitation periods run from the date on which CIMA became aware of the commission of the relevant breach. CIMA will be deemed to have become aware of a breach when it first received information from which the breach can be reasonably inferred.
7. 42F of the Monetary Authority Act.
8. Regulations 5 and 6 of the Fines Regulations prescribe criteria for exercising fine discretions ("Prescribed Criteria").
9. These principles prevail over the factors and the other criteria (including the Prescribed Criteria).
10. The principle of ensuring licensees under regulatory laws and those connected to them do not gain from breaching prescribed provisions.
11. The need to punish intentional, reckless or inappropriately negligent breaches of prescribed provisions.
12. The need to deter financial services businesses and others from breaching prescribed provisions.
13. Article 19 of the Bill of Rights scheduled to the Cayman Constitution Order 2009
14. If a person requests the early settlement of an administrative fine, the process is set out in Part III, section 11 of the Authority's, Regulatory Handbook, March 2019.
15. Leave applications are brought pursuant to Order 53(1) of the Grand Court Rules Vol 1 – Orders – (2023 Revision) (as amended) and/or Regulation 19 of the Fines Regulations. In the recent decision Sterling Asset Management International Limited v The Cayman Islands Monetary Authority, unreported, 3 June 2022 (FSD 0124 of 2022) an application was brought by Sterling Asset Management International Limited to seek leave to apply for judicial review of a $299,050 fine imposed by CIMA for the investment management firm's anti-money laundering breaches. By the terms of a consent order dated 21 April 2023, CIMA withdrew the fine notice such that no discretionary fines were imposed.
16. Regulation 21 of the Fines Regulation.
17. Regulation 23 of the Fines Regulation.
18. As supplemented by Practice Direction 4 of 2013 entitled Pre-Action Protocol for Judicial Review.
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.
