Sep 2026
In July 2026, the Cayman Islands Monetary Authority (CIMA) finalised two new Rules that will impact the compliance landscape in the Cayman Islands, both taking effect on 18 September 2026:
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Rule on Effective Compliance Programme for the Prevention and Detection of Money Laundering, Terrorist Financing and Proliferation Financing for Financial Services Providers (the “Compliance Rule”); and
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Rule on Compliance with Financial Sanctions and Targeted Financial Sanctions (the “Sanctions Rule”).
(Collectively, the “Rules”)
Background and Rationale
The Rules respond to the Caribbean Financial Action Task Force (CFATF) 4th Round Mutual Evaluation, which found that CIMA’s existing Guidance Notes on the Prevention and Detection of Money Laundering, Terrorist Financing and Proliferation Financing (the “Guidance”) do not meet the required enforcement standard. This is particularly significant ahead of the CFATF’s 5th Round Mutual Evaluation on-site inspection of the Cayman Islands, scheduled for 2027. To close these gaps, specific sections of the Guidance have been elevated into the new Rules to make them legally enforceable, while the Guidance continues to provide non-binding supplementary guidance.
Compliance Rule
Insurers that do not conduct “Relevant Financial Business” will not be required to comply with the Compliance Rule. However, the Guidance continues to maintain CIMA’s expectation that such entities maintain appropriate AML/CFT/CPF policies and procedures, and these requirements are also often reflected in licensing conditions.
For insurers that do conduct “Relevant Financial Business”, the Compliance Rule prescribes more detailed minimum standards for an effective compliance programme, including enhanced audit, governance, and risk assessment requirements. In particular, an external AML auditor must be appointed after two consecutive internal AML audit cycles.
Sanctions Rule
The Sanctions Rule has a broader scope: it applies to “Regulated Persons” being any person, entity, or arrangement regulated by CIMA under the Regulatory Acts (including the Insurance Act), regardless of whether they conduct “Relevant Financial Business.” This is intentional. CIMA stated in its responses to private sector feedback during the consultation phase that reinsurers, though excluded from “Relevant Financial Business” under POCA, will fall within scope of the Sanctions Rule. CIMA have also reconfirmed this position in its published FAQs.
The Sanctions Rule requires integration of sanctions compliance into broader AML/CFT/CPF programmes and consolidates targeted financial sanctions obligations into a legally enforceable instrument. It also includes a bright-line prohibition on assigning “low” Geographic Risk ratings to customers in UK, UN or US/OFAC-sanctioned countries; a requirement to re-screen all customers “without delay” upon any Sanctions List update; codifies asset freezing procedures; and includes a new obligation to verify potential sanctions matches to avoid false positives.
Although (re)insurers have always been subject to the prohibitions and obligations under sanctions orders, the Sanctions Rule represents a notable shift in the regulatory landscape. It will also raise practical challenges for (re)insurers that do not conduct Relevant Financial Business, particularly regarding how such entities should address these new obligations, which presuppose a comprehensive AML Compliance Programme is already in place.
Key Takeaways
The new Rules mark a significant shift from guidance-based to legally enforceable AML/CFT/CPF and sanctions requirements. All Cayman Islands insurers, reinsurers, insurance managers and insurance agents should:
- Conduct a gap analysis against the Sanctions Rule (all entities) and, if conducting Relevant Financial Business, also against the Compliance Rule.
- Review governance structures to ensure compliance with the Sanctions Rule and, where applicable, the enhanced governance requirements under the Compliance Rule.
- Update policies and procedures to address the Sanctions Rule requirements and, if conducting Relevant Financial Business, the additional requirements under the Compliance Rule.
- For entities conducting Relevant Financial Business, assess audit arrangements in light of the new external AML auditor requirements under the Compliance Rule.
Conyers regularly advises on AML/CFT/CPF and sanctions compliance and can assist with assessing the impact of the Rules and implementing the necessary changes.