Anti Money Laundering (AML) in Cayman Islands
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|Money laundering in the Cayman Islands is a significant issue because the territory is a prominent offshore financial center. The Cayman Islands continue to make strides in developing Anti-Money Laundering (AML) legislation, including the first successful prosecution of a money laundering case in February 2005.
As the world’s fifth largest financial center, the Cayman Islands are home to a well-developed offshore financial center that provides a wide range of services, such as private banking, brokerage services, mutual funds, and various types of trusts, as well as company formation and company management.
The Cayman Islands Monetary Authority (CIMA) is responsible for the licensing, regulation, and supervision of the Cayman Islands’ financial industry, which includes banks, trust companies, mutual funds, insurance companies, money service businesses (MSBs), and corporate service providers.
Established under the Proceeds of Criminal Conduct (Amendment) Law of 2003 (PCCL, the Financial Reporting Authority (FRA) replaces the former Financial Intelligence Unit (FIU) of the Cayman Islands. The FRA opened on January 12, 2004. The FRA is a separate civilian authority governed by the Anti-Money Laundering Steering Group (AMLSG), which is chaired by the Attorney General.
The Proceeds of Crime Law was enacted in September 2008, repealing the previous Anti-Money Laundering Law (the Proceeds of Criminal Conduct). The Money Laundering Regulations (2013 revision) and the Guidance Notes on the Prevention and detection of Money Laundering in the Cayman Islands (2010 revision) were amended by the Proceeds of Crime Law. The Money Laundering Regulations address one-off transactions conducted with institutions that have no physical presence in the territory in which it is incorporated, while the Money Laundering Guidance Notes provide clarification on correspondent banking relationships with shell banks.
AML Training in the Cayman Islands
The Proceeds of Criminal Conduct (Amendment) Law and the Anti Money Laundering (AML) Regulations require that financial institutions within the Cayman Islands create and implement appropriate training programs to combat illicit financial transactions from occurring in the country.
In response to a recommendation from the Caribbean Financial Action Task Force (CFATF) during their 2007 evaluation of the Cayman Islands’ money laundering regime, the Guidance Notes on Money Laundering were amended to indicate that financial institutions should have policies and procedures in place to address any specific risks associated with non-face-to-face business relationships or transactions.
The Economy of the Cayman Islands
With no direct taxation, the islands are a thriving offshore financial center. More than 68,000 companies were registered in the Cayman Islands as of 2003, including almost 500 banks, 800 insurers, and 5,000 mutual funds. A stock exchange was opened in 1997.
Tourism is also a mainstay, accounting for about 70% of the Gross Domestic Product (GDP) and 75% of foreign currency earnings. The tourist industry is aimed at the luxury market and caters mainly to visitors from North America. About 90% of the islands' food and consumer goods must be imported. The Caymanians enjoy one of the highest outputs per capita and one of the highest standards of living in the world.
Banking in the Cayman Islands
The Cayman Islands Monetary Authority (CIMA) serves as the Central Bank.
The CIMA was established under The Monetary Authority Law. The former responsibilities, duties, and activities of the Financial Services Supervision Department and the Cayman Islands Currency Board now fall to the CIMA, which was created from the merger of these two bodies.
The Central Bank is the issuer of legal currency, as well as the supervisor of the financial services sector.
The Cayman Islands' Currency
The currency in the Cayman Islands is the dollar (KYD), which is divided into units of 100 cents, much like the United States Dollar. The KYD is the ninth most valuable currency unit in the world.
Bank notes are issued in 1, 5, 10, 25, 50 and 100 dollar denominations.
Coins are issued in 1, 5, 10 and 25 cent denominations.
Other Key Statistics of The Cayman Islands
Time Zone: (UTC-5) .
Location: Caribbean, three-island group (Grand Cayman, Cayman Brac, Little Cayman) in Caribbean Sea, 240 km south of Cuba and 268 km northwest of Jamaica.
Population: 56,732 (2014 estimate.).
Capital: George Town.
Languages Spoken: English.