Cayman financial services providers, including entities carrying on securities investment business (“SIB”) are required to comply with the Proceeds of Crime Law (2018 Revision), the Anti-Money Laundering Regulations (2018 Revision) (the “AMLRs”) and associated Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands, December, 2017 (as amended) (the “Guidance Notes”) in order to prevent and report money laundering, terrorist financing and proliferation financing. The Guidance Notes provide, amongst other things, that financial services providers should, on a regular basis, conduct an AML/ CFT audit, the frequency of which should be commensurate with the entity’s nature, size, complexity and risks identified during its risk assessments.

By Notice dated 25 January 2019 the Cayman Islands Monetary Authority (“CIMA”) confirmed that they have been requesting that entities carrying on SIB that are registered with CIMA as “excluded persons” (the “Company”) have their AML/ CFT systems and procedures audited by suitably qualified entities to check for compliance with the AMLRs. The scope of such audit reports should at a minimum assess whether:-

  • The Company’s AML/ CFT policies and procedures, internal controls/risk management and implementation of the same are adequate;
  • The Company and its directors are carrying on business in a fit and proper manner;
  • The Company conducts periodic reviews of its operations against the AML/ CFT and current industry best practice;
  • The Company maintains a relevant client risk matrix and has in place adequate identification procedures around the on-boarding of clients i.e. know your client, client due diligence, customer risk rating, enhanced due diligence standards;
  • The Company has adequate internal reporting procedures, including the maintenance of a suspicious activity reporting log;
  • The Company has adequate record-keeping procedures and maintenance thereof in accordance with prescribed periods as required under the ALMRs;
  • The Company has adequate identification and record keeping policies and procedures relating to wire transfers;
  • The Company provides adequate AML training to its management, staff and in particular, the Money Laundering Reporting Officer (the “MLRO”);
  • In cases where group-wide AML policies are adapted, a gap analysis has been conducted to ensure compliance with the Cayman Islands’ AML/ CFT framework;
  • There is demonstrated separation of the role of the Anti-Money Laundering Compliance Officer and the MLRO from the shareholders of the Company; and
  • The Company’s marketing material includes false or misleading representations, or omissions that could ultimately mislead investors.

Going forward, the AML/ CFT audit reports will be used by CIMA to aid them in their assessment of entities’ ongoing compliance with the AMLRs and the frequency for subsequent AML/ CFT audit reports to be provided.

Should you have any queries please contact either CIMA’s Securities Supervision Division at [email protected] or your usual Conyers Dill and Pearman contact.


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