Regulatory & Risk Advisory Review: Cayman Islands – July to September 2025

The Cayman Islands Department for International Tax Cooperation (DITC) has announced the launch of its new portal for Country-by-Country Reporting (CbCR), effective 29 August 2025. All multinational enterprise (MNE) groups with Cayman Islands constituent entities (CEs) are now required to re-register on the DITC Portal by 30 November 2025, following the decommissioning of the legacy CbCR portal.

Key points:

• Mandatory Re-Registration: Every MNE group with Cayman Islands CEs must re-register via the new DITC Portal to ensure ongoing compliance with the CbCR Regulations. The process is centralized, requiring a single notification for all Cayman Islands CEs within the same MNE group. MNE groups will be required to identify the reporting entity (RE), which is typically the group’s Ultimate Parent Entity (UPE), or in certain cases, a Surrogate Parent Entity (SPE).

• Updated Guidance: Revised CbCR guidelines and resources are now available on the DITC website, replacing all previous versions. These provide detailed instructions on registration and compliance.

• Reporting Functionality: The DITC expects to enable CbCR return filing on the new portal by November 2025, with further instructions to be communicated to registered contacts.

MNE groups should ensure timely re-registration and review the updated guidance to avoid compliance issues.

5.1 Overview of the FATF’s 2025 Comprehensive Update on Terrorist Financing Risks

As noted above, the Financial Action Task Force (FATF) released its 2025 “Comprehensive Update on Terrorist Financing Risks,” providing a timely and in-depth analysis of how terrorist groups continue to raise, move, and utilise funds globally. The report highlights the persistent adaptability of terrorist organisations, which increasingly exploit both traditional and emerging financial channels—including digital platforms, virtual assets, and informal value transfer systems—to support their activities. Notably, the FATF underscores that while cash and informal money transfer services remain prevalent, there is a marked rise in the abuse of online payment services, mobile money, and virtual assets, particularly in jurisdictions with less robust regulatory oversight.  

The report identifies several key factors influencing Terrorist Financing (TF) risks, such as territorial control by terrorist groups, proximity to armed conflict, weak governance, porous borders, and the prevalence of informal or cash-based economies. These vulnerabilities are particularly acute in regions like sub-Saharan Africa and the Sahel, which have emerged as global epicentres of terrorist activity. The FATF also notes the growing convergence between terrorist financing and organised crime, with terrorist groups increasingly engaging in activities such as extortion, trafficking, and the exploitation of natural resources to generate revenue.  

For jurisdictions like the Cayman Islands, the report’s findings reinforce the importance of maintaining a robust, risk-based approach to anti-money laundering and counter-terrorist financing (AML/CFT) compliance. The FATF calls for enhanced international cooperation, effective implementation of its standards—especially in high-risk sectors such as money value transfer services and virtual asset service providers—and greater engagement with sectors not traditionally covered by AML/CFT regulations, including social media and crowdfunding platforms. The report also stresses the need to balance CFT measures with the safeguarding of legitimate humanitarian activities, ensuring that regulatory responses do not inadvertently impede essential aid.  

5.2 Jurisdictions Under Increased Monitoring

Jurisdictions under increased monitoring are actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing. When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring. This list is often externally referred to as the “grey list”. 

Following review completed in June 2025, the FATF now also identifies Bolivia and the Virgin Islands (UK) as requiring increased monitoring. 

5.3 Overview of “Preparation for FATF 5th Round Mutual Evaluation”

The Financial Action Task Force (FATF) conducts periodic mutual evaluations of its member jurisdictions to assess their compliance with international standards on AML and Counter-Terrorist Financing (CTF). The upcoming 5th Round Mutual Evaluation represents a critical opportunity for the Cayman Islands to demonstrate the effectiveness of its AML/CTF framework and its commitment to global best practices. This evaluation will scrutinize both the technical compliance of the jurisdiction’s laws and regulations, as well as the practical effectiveness of their implementation. 

In preparation for the evaluation, Cayman Islands stakeholders—including government agencies, financial institutions, and professional service providers—are expected to review and, where necessary, enhance their internal policies, procedures, and controls. This process involves ensuring that customer due diligence, record-keeping, and reporting obligations are robust and in line with FATF recommendations. Additionally, there is an emphasis on ongoing training and awareness to ensure that all relevant personnel are equipped to identify and mitigate potential risks. 

The 5th Round Mutual Evaluation is not only a regulatory exercise but also an opportunity for the Cayman Islands to reinforce its reputation as a well-regulated and transparent international financial centre. Proactive engagement and thorough preparation will be essential to achieving a positive outcome, which in turn will support continued access to global financial markets and bolster investor confidence.