Beneficial Ownership Transparency Act (Access Restriction)
The Beneficial Ownership Transparency (Legitimate Interest Access) Regulations, 2024 (the Legitimate Interest Access Regulations) & the Beneficial Ownership Transparency (Access Restriction) Regulations, 2024 (the Access Restriction Regulations) commenced on 28 February 2025. The Legitimate Interest Access Regulations allow a member of the public to apply for access to the beneficial ownership register of a Cayman Islands entity. To succeed, the applicant must evidence that it has: (1) a legitimate interest in the information for the purposes of preventing, detecting, investigating, combating or prosecuting money laundering or its predicate offences or terrorism financing; and (2) that the applicant is: (a) a journalist or conducting bona fide academic research; (b) acting on behalf of a civil society organisation whose purpose includes the prevention or combating of money laundering, its predicate offences or terrorism financing; or (c) seeking the information in the context of a business relationship or transaction with the Cayman Islands entity.
The Access Restriction Regulations establish a framework for beneficial owners and senior managing officials of in-scope Cayman Islands entities to apply to protect their information from being disclosed under the Legitimate Interest Access Regulations. To successfully restrict access, the applicant needs to demonstrate that disclosure of the information would place the applicant or a member of their household at serious risk of kidnapping, extortion, violence, intimidation or any similar danger or serious harm.
Conyers has been assisting a number of clients with Access Restriction Applications. Please reach out to our regulatory team if you would like to explore this option.
Defence Against Money Laundering
Effective 2 January 2025, the Cayman Islands implemented amendments to the Proceeds of Crime Act (POCA), introducing the concept known as the DAML Framework.
Previously, individuals or entities who intended to deal with potential illicit funds or property could benefit from a defence to a money laundering offence by filing a Suspicious Activity Report (SAR) with the Financial Reporting Authority (FRA).
Under the new DAML Framework, in order to rely upon the defence firms will need to obtain consent (or deemed consent) from the FRA prior to proceeding with the transaction or proposed activity.
Key Changes
- Mandatory FRA Consent: In addition to filing a SAR, individuals must now receive consent from the FRA prior to dealing with the actual or potentially illicit property. Engaging in the transaction without this consent may result in a core money laundering offence being committed;
- Deemed Consent Mechanism: The FRA has also established a “Deemed Consent” regime to limit unnecessary delays. Upon submitting a DAML SAR, the FRA has a seven-working-day period (Notice Period) to respond. If the FRA does not issue a response within this timeframe, consent is deemed to have been granted, allowing the person or entity to proceed with the relevant transaction or proposed activity; and
- Moratorium Period: Should the FRA refuse consent, a 30-calendar-day “Moratorium Period” will commence immediately after the refusal notice. During this period, the proposed activity must not be undertaken, in order to provide law enforcement agencies time to initiate further actions, such as obtaining freezing or restraint orders on the property in question.
CIMA Circular on the Importance of a Comprehensive Crisis Management Framework and CIMA’s Commitment to Implementation
On 10 January CIMA issued a circular setting out its plan implementing a comprehensive crisis management framework for the Cayman Islands. The Circular outlines CIMA’s intention to issue a Rule and Statement of Guidance on Recovery and Resolution Planning (the “Rule”).
The proposed Rule which is still in the consultation phase, sets out clear rules and guidance on the requirements and key elements of effective recovery and resolution planning for a number of regulated entity types that pose a systemic risk to the financial system in the Cayman Islands (including Class A and Class D insurers). The Rule does not expressly apply to Class B insurers but it is open to CIMA to impose the requirements under the Rule on any regulated entity which may pose a financial stability risk as CIMA determines.
The proposed Rule notes that recovery and resolution planning may vary from one regulated entity to another, hence, the development of a recovery and resolution plan should be guided by the principle of proportionality, commensurate with the size, complexity, structure, nature of business and risk profile of the operations of the regulated entity, as is typical for the application of CIMA’s Rules and Statements of Guidance. The requirements, if passed as currently drafted under the Rule, will require in-scope insurers to have in place detailed recovery and resolution plans that will be subject to CIMA oversight and scrutiny.
For the latest Cayman Islands regulatory updates from our team, please refer to our latest Regulatory & Risk Advisory Outlook available here.