The Anti-Money Laundering Regulations, 2017 (“AML Regulations”) came into force on 2 October 2017. The AML Regulations demonstrate Cayman’s ongoing commitment to complying with the highest international standards on combatting money laundering and terrorist financing and aim to ensure consistency with the Financial Action Task Force (FATF) 2012 recommendations, in accordance with its position as a leading international finance centre.
Some key changes to the AML/CFT regime under the AML Regulations are as follows:-
Comprehensive procedural updates have been introduced for assessing and applying a risk based approach to money laundering and terrorist financing risks and compliance. This includes the requirement to conduct a business risk assessment of products, practices, delivery mechanisms (data) and new or developing technology risks in accordance with the FATF recommendations.
The AML Regulations contain specific requirements to identify beneficial owners and legal arrangements and to apply a risk based approach in conducting client due diligence on existing relationships.
Pursuant to the risk assessment procedures, some customer relationships assessed as higher risk shall be determined to require enhanced due diligence i.e. beyond standard due diligence. Pursuant to the risk assessment procedures, some customer relationships assessed as higher risk shall be determined to require enhanced due diligence i.e. beyond standard due diligence. A new Part has been introduced to address procedures applicable to politically exposed persons and their family members and close associates.
Where a customer relationship has been assessed as lower risk, simplified due diligence procedures (or avoid conducting full verification) may be applied. The majority of KYC exceptions under the prior Regulations and Guidance Notes continue to exist except for certain significant adjustments.
Any person who breaches the AML Regulations commits an offence and is liable on summary conviction to a fine of up to CI$500,000 (approximately US$600,000) or on indictable conviction to a fine (unlimited) and imprisonment for two years. These are substantial increase in penalties from the prior Regulations.
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