The Cayman laws have been revised in order to further combat money laundering and terrorist financing. The main changes include extending the reach of hedge and private equity funds, appointing compliance officers, integrating risk based approach, and redefining how due diligence is approached. As issued by the Cayman Islands Monetary Authority, the power of the Proceeds of Crime Law has expanded to not only cover mutual funds, registered and closely held funds, but also single investor funds and private equity funds. Requiring that an AML compliance officer, AML reporting officer and a deputy AML reporting officer be appointed for all funds is another measure introduced through the new Cayman regime. Appointing an AML officer will help companies stay compliant and up to date with all AML laws and regulations.
The risk based approach of the revised regime now requires companies to assess AML, terrorist funding, and overall risks to their company in order to take the next appropriate action. Risk assessments are important in providing companies a new, simplified way in dealing with investors which are deemed as low risk. To be considered as low risk, listed companies must be approved by the Cayman Islands Anti-Money Laundering Steering Group or the Cayman Islands Monetary Authority.
In the past, companies were able to receive funds from a bank account so long as the names of the investor and the account matched. However, the regime now calls for the verification of the investor’s identity to be confirmed before they can receive the assets. For instances where companies are high risk due to the country they are based in or if an investor is a politically exposed person (PEP), stronger due diligence policies are required. Companies must now go beyond customary identification and verification and also intensify monitoring.
- Companies can hire representatives from outside of the Cayman Islands but would still need to be compliant with the new regime and the relevant regulations.
- Companies follow only the required regulations of the regime and entrust this task to one representative.
- Companies hire a third party to regulate all or part of their compliance needs.
Companies are also in charge of ensuring that records are given to the Cayman Islands Monetary Authority whenever requested regardless of whichever option they choose to follow. With this new regime, it is important that administrators take charge in order for the new regulations and requirements to be met.
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