New Cayman bill to expand the definition of 'money laundering regulations'

23 Apr 2019

If passed into law in its current form, The Monetary Authority (Amendment) Bill, 2019 (‘Bill’) published in the Cayman Islands (‘Cayman’) Gazette, will amend the Monetary Authority Law (2018 Revision) (‘MAL’) to clarify the definition of ‘money laundering regulations’. The definition will be expanded to include regulations made under section 145 of the Proceeds of Crime Law (2019 Revision) (‘PCC Law’), although the Bill currently refers to the earlier 2018 Revision.

What will change?
The Bill proposal is to change the definition of ‘money laundering regulations’ in section 2 of the MAL. Without the proposed amendment, section 2 of the MAL reads:

“money laundering regulations” means regulations made under section 201 of the Proceeds of Crime Law, (2018 Revision);

As drafted, the Bill would amend that to read:

“money laundering regulations” means regulations made under section 145 or section 201 of the Proceeds of Crime Law, (2018 Revision);”

So what is new?
The MAL’s existing reference to s.201 refers to the Cayman Cabinet’s ability to make regulations to give effect to the PCC Law and the rules around that ability (see below). Adding the references to s.145 (See below) adds the Cabinet’s ability to make regulations

‘…prescribing measures to be taken to prevent the use of the financial system and any other facilities provided in or from within the Islands for the purposes of criminal conduct including measures.’

Cayman’s commitment to global standards
The change proposed in this Bill is part of Cayman’s continuing commitment to ensure the effectiveness of its Anti-Money Laundering and Counter the Financing of Terrorism (AML/CFT) framework.

 

Proceeds of Crime Law (2019 Revision)
145. (1) The Cabinet may, upon the recommendation of the Anti-Money Laundering Steering Group, the Monetary Authority and the Financial Reporting Authority, make regulations prescribing measures to be taken to prevent the use of the financial system and any other facilities provided in or from within the Islands for the purposes of criminal conduct including measures —

(a) to utilise systems and train employees to prevent money laundering;

(b) to manage and mitigate any risks that may be involved in the course of business;

(c) to conduct the appropriate and adequate due diligence of a customer or a person with whom business is conducted;

(d) to ensure that proper and adequate records are kept;

(e) that may be required to be utilised in matters involving specific types of customers or activities which may include a politically exposed person or the transfer of currency;

(f) to maintain the prescribed obligations of a financial institution or a designation non-financial business or profession in the prevention of money laundering; and

(g) to ensure that proper and adequate reports are made to the relevant Authority in the Islands regarding any suspicious activity related to money laundering.

(2) Regulations made under subsection (1) may —

(a) make different provisions for different circumstances or cases and may contain incidental, supplementary and transitional provisions;

(b) provide that the contravention of any provision of those regulations constitutes an offence and may prescribe penalties for any such offence —

(i) on conviction on indictment, consisting of a fine and imprisonment for two years; or

(ii) on summary conviction, consisting of a fine of five hundred thousand dollars;

(c) prescribe the manner in which an administrative penalty system with a maximum penalty of two hundred and fifty thousand dollars may be implemented; and

(d) prescribe fees, subscriptions or other monies which may be payable by any person who is supervised in accordance with this Law and the regulations.

Proceeds of Crime Law (2019 Revision)
201. (1) The Cabinet may make regulations for giving effect to this Law and such regulations may —

(a) make different provision for different purposes;

(b) provide for the making of immediate and interim short-term restraint orders not exceeding seventy-two hours;

(c) prescribe that confiscation orders be applied for only by such person as the regulations may specify;

(d) specify the need or otherwise for a prosecuting attorney where an application is made for a production order, it being understood that in the absence of such regulations, prosecuting attorney need not be present;

(e) limit, in exceptional circumstances, the recovery of costs of complying with orders of the Grand Court, subject only to section 198; and

(f) make supplementary, incidental, saving or transitional provisions.

(2) Without limiting the generality of subsection (1) the Cabinet may by order make such provision as it considers appropriate for or in connection with —

(a) enabling confiscation orders under this Law but such order may not enable a confiscation order to be made by any summary court in respect of an amount exceeding one hundred thousand dollars;

(b) the appointment of an Official Receiver of property that may be confiscated or restrained under this Law, and such Official Receiver shall also be Trustee for Civil Recovery for purposes of this Law, and, in the Cabinet’s discretion, may undertake this work exclusively or simultaneously with any other position he may hold in government.

(3) The Cabinet may, on the recommendation of the Anti-Money Laundering Steering Group, by Order, designate a jurisdiction as one which has serious deficiencies in its compliance with recognized international standards for combating money laundering and the financing of terrorism and therefore require that no dealings be conducted with that jurisdiction or that enhanced due diligence be applied to —

(a) transactions involving certain entities or classes of entities; or

(b) certain transactions or classes of transaction.

(4) In making the recommendation under subsection (3) the matters to be considered by the Steering Group, the (a) enabling confiscation orders under this Law but such order may not enable a confiscation order to be made by any summary court in respect of an amount exceeding one hundred thousand dollars;

(b) the appointment of an Official Receiver of property that may be confiscated or restrained under this Law, and such Official Receiver shall also be Trustee for Civil Recovery for purposes of this Law, and, in the Cabinet’s discretion, may undertake this work exclusively or simultaneously with any other position he may hold in government.

(3) The Cabinet may, on the recommendation of the Anti-Money Laundering Steering Group, by Order, designate a jurisdiction as one which has serious deficiencies in its compliance with recognized international standards for combating money laundering and the financing of terrorism and therefore require that no dealings be conducted with that jurisdiction or that enhanced due diligence be applied to —

(a) transactions involving certain entities or classes of entities; or

(b) certain transactions or classes of transaction.

(4) In making the recommendation under subsection (3) the matters to be considered by the Steering Group, the form, duration and effect of the Order shall be prescribed by the Cabinet.

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