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Cayman Islands removed from FATF grey list

Financial Services Minister André Ebanks hailed a “tremendous achievement” for the Cayman Islands following the news that the jurisdiction will be removed from the global Financial Action Task Force’s grey list.

Following a years-long effort across two governments, the decision was announced Friday, 27 Oct., following a three-day meeting of the FATF Plenary in Paris.

The list is for nations that have inadequate counter money laundering, terrorist financing, and proliferation financing measures but are actively working on improving them.

Cayman’s removal from that group after over two years means it is considered to have adequately addressed those weaknesses.

Ebanks, Minister of Financial Services and Commerce, who attended the meeting in Paris, said in a press release, “Team Cayman faced this challenge with faith, competence and dedication.

“We had a shared determination to step out from under this shadow as soon as possible and we have done exactly that.”

He added that the outcome confirms Cayman’s reputation as a well-regulated jurisdiction in anti-money laundering matters.

“We have demonstrated that we are a global partner in financial services,” he said.

“And with this tremendous achievement, the Cayman Islands is on the move, looking to bolster our commercial offerings for sound business, and our corresponding compliance regime.”

Effective regime

Attorney General Samuel Bulgin, who chairs Cayman’s Anti-Money Laundering Steering Group and also attended the meeting, said the importance of the achievement cannot be overstated.

“FATF’s decision confirms that our anti-money laundering regime effectively deters, detects, arrests and prosecutes financial crimes in the Cayman Islands, and that it also supports other countries’ efforts.”

Cayman’s efforts to meet the global standards included setting up a new police unit to investigate international financial crime, changing multiple pieces of legislation and introducing new standards for realtors and precious metal dealers.

Steve McIntosh, CEO of Cayman Finance, said the financial services industry association welcomes FATF’s recognition of Cayman’s anti-money laundering regime as effective.

“Our proven regulatory and legal framework is one of the key reasons why asset managers, investors and other clients have full confidence in doing business the Cayman Islands,” he said.

“The FATF process recognises that the Cayman Islands not only has one of the highest levels of technical compliance with global anti-money laundering standards, but also that they are effectively applied in practice.”

To maintain this status, a lot of work has gone into further strengthening Cayman’s financial services legislation and the implementation of new regulations, he said.

It is a “testament to the strong collaborative relationship between the Cayman Islands government and the financial services industry”, he added.

Met commitments

A public statement from the FATF said: “The FATF welcomes the Cayman Islands’ significant progress in improving its anti-money laundering, combatting the financing of terrorism (AML/CFT) regime.”

It added that Cayman met the commitments in its action plan on strategic deficiencies that the FATF had identified in February 2021 – when it was placed on the grey list.

The first relates to applying sanctions that are effective, proportionate and dissuasive, and taking administrative penalties and enforcement actions against obliged entities to ensure that breaches are remediated effectively and in a timely manner.

The second was imposing adequate and effective sanctions in cases where relevant parties do not file accurate, adequate and up-to-date beneficial ownership information.

And thirdly, demonstrating that they are prosecuting all types of money laundering in line with the jurisdiction’s risk profile, and that such prosecutions are resulting in the application of dissuasive, effective and proportionate sanctions.

“The Cayman Islands is therefore no longer subject to the FATF’s increased monitoring process,” the statement said.

It added that the Cayman Islands should continue to work with Caribbean FATF to sustain its improvements.

Also removed from the grey list on Friday were Albania, Jordon and Panama.

Critical issues

Cayman was placed on the list in February 2021, two years after the Caribbean Action Task Force released a critical evaluation that highlighted shortcomings.

At the time, FATF president Marcus Pleyer said Cayman must address “two critical issues”.

Firstly, it must improve “in the area of sanctions on financial institutions for anti-money laundering breaches”.

And secondly, regulators “must show that they penalise those who do not provide accurate up-to-date beneficial ownership information”, he said.

“From countries [that] have higher risks, we expect commensurate measures against this risk and that is the reason why the Caymans are now on the so-called grey list,” he added.

Of the 26 jurisdictions that were on the grey list prior to Friday’s announcement, three others were also in the Caribbean – Barbados, Haiti and Jamaica.

While not as severe as the FATF’s blacklist, which only included the uncooperative countries Iran, North Korea and Myanmar, being placed on the grey list is still a repetitional blow.

FATF’s decision to delist the Cayman Islands completes the jurisdiction’s participation in the fourth-round mutual evaluation process.

It will commence its fifth-round process in 2025, with Cayman’s evaluation expected to begin in 2026.

Bulgin said the team is monitoring and anticipating changes to the FATF standard to ensure that local policies and legislation align.

ORIGINALLY PUBLISHED IN THE CAYMAN COMPASS. Click to read original article.

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