New Cayman Islands Anti-Money Laundering (Amendment) Regulations 2019
25 July 2019
New Cayman Islands (‘Cayman’) Anti-Money Laundering (Amendment) Regulations 2019 (‘Regulations’) were introduced in June 2019, and amend the Anti-Money Laundering Regulations (2018 Revision) (‘2018 Regulations’). The Cayman Islands Monetary Authority ('CIMA') also issued a notice under s.53A of the Regulations requiring Excluded Persons under the Securities and Investment Business Law to file Anti-Money Laundering ('AML') and Counter the Financing of Terrorism ('CFT') forms by 15 August 2019.
What was the old regime?
The 2018 Regulations imposed a duty on natural persons who were ‘designated non-financial business and profession’ (‘DNFBP’ – see definition below) or ‘connected persons’ in relation to the DNFBP to provide information and documents requested by Supervisory Authority. There are several Supervisory Authorities for all DNFBPs, with none having overall authority.
What has changed?
The existing regime is repealed and the obligation to provide information and documents is replaced by:
a) new disclosure requirements for persons carrying out ‘relevant financial business’ under section 53A ('RFB' - defined below);
b) penalties for failure to produce information (s.53B); and,
c) a requirement to share information under section 53C. The definition of ‘connected person’ is also expanded.
What is the new ‘Connected Person’ definition?
The Regulations repeal the existing definition of ‘connected person’ in the 2018 Regulations and replace it with an extended definition, as follows:
‘Connected person’ means, in relation to a person carrying out relevant financial business where the person is a body corporate, partnership or unincorporated body-
(a) a manager of the body corporate, partnership or unincorporated body;
(b) a director, secretary or senior executive of the body corporate, partnership or unincorporated body, regardless of job title; or
(c) the natural person who ultimately owns or controls the body corporate, partnership or unincorporated body and includes —
(i) in the case of a legal person, other than a company whose securities are listed on a recognised stock exchange, a natural person who ultimately owns or controls, whether through direct or indirect ownership or control, ten per cent or more of the shares or voting rights in the legal person;
(ii) in the case of a legal person, a natural person who otherwise exercises ultimate effective control over the management of the legal person; or
(iii) in the case of a legal arrangement, the trustee or other person who exercises ultimate effective control over the legal arrangement;.
What are the new disclosure duties?
A person carrying out relevant financial business ('RFB Person') has to provide such documents, statements or any other information as the Supervisory Authority may reasonably require (by Notice, in writing) in connection with the exercise of its functions. A document will still have to be produced even if it is subject to a lien. An RFB Person (and connected person or persons believe to hold relevant information) may also be required to attend before the Supervisory Authority and answer questions which it deems necessary in connection with its inquiry. The Supervisory Authority's notice can require that information is provided in visible and legible form and that anything in a language other than English is translated.
What are the penalties for failure to produce information?
CIMA or a Supervisory Authority may impose a fine under the Monetary Authority Law (2019 Revision) or the Regulations.
Can a Supervisory Authority share this information?
A Supervisory Authority, or competent authority or 'government body' (see below), may share or provide any information as required to assess assessing money laundering or terrorist financing risks or in the discharge of any of its functions or the exercise of any power under the Proceeds of Crime Law (2019). Information which the Supervisory Authority asks for must be provided within a reasonable time and there are close rules on what can be done with information which has been shared.
What is a 'government body'?
The Regulations provide the following definition of what constitutes a 'government body' and defines the terms used in that definition.
'Government body' means:
(a) government company;
(b) entity within the public service; or
(c) statutory authority, within Cayman;
'Government company' means:
(a) a company in which the Government has controlling interest; and
(b) in respect of each such company, includes all subsidiary entities of the company;
'Public service' includes Ministries, Portfolios, departments, agencies reporting directly to the Legislative Assembly, Governmental committees, statutory authorities and government companies;
'Statutory authority' means an entity established by a Law to carry out functions which are capable under that Law, of being funded, partly or entirely, by money provided by Cabinet, and for which the Governor or the Cabinet has the power to appoint or dismiss the majority of the Board or other governing body.
What are DNFBPs?
The businesses and professions designated as DNFBPs are (a) real estate agents and brokers; (b) dealers in precious metals; (c) dealers in precious stones; (d) firms of accountants; and (e) firms of attorneys at law.
What is relevant financial business?
Briefly, the definition of relevant financial business includes the following:
- Investment funds, both open-ended and closed-ended, which are not registered with CIMA, such as exempted open-ended funds, private equity funds and venture capital funds;
- Regulated investment funds registered with the Cayman Islands Monetary Authority ('CIMA');
- Insurance managers, insurance agents or insurance brokers in relation to long-term business;
- Other entities which conduct 'relevant financial business' such as management vehicles (even if registered as an Excluded Person with CIMA), General Partners ('G.P.s') of investment funds and fund trading subsidiaries.
- Otherwise investing, administering or managing funds or money on behalf of other persons.
- Underwriting and placement of life insurance and other investment related insurance.