7 November 2023 - On 27 October 2023, the Cayman Islands was removed from the Financial Action Task Force (FATF)’s ‘grey list’. The FATF, an intergovernmental organization on the initiative of the G7 to develop policies to combat money laundering, maintains listings of countries who fall short of agreed parameters, with those countries placed under an increased monitoring grey list, or, the more severe black list. If listed, a jurisdiction will remain under increased monitoring until such time as it demonstrates improvements to its Anti-Money Laundering (AML), Combating the Financing of Terrorism (CFT) and Proliferation Financing (PF) regime. Every jurisdiction is subject to monitoring during a round of mutual evaluations.
In June 2023, FATF announced that the Cayman Islands had satisfied all 63 recommendation actions imposed from its fourth mutual evaluation report; and, further to the satisfactory findings of an on-site visit at the end of August 2023, the FATF has now determined that the Cayman Islands is eligible to be removed from the grey list. This brings an end to the jurisdiction’s two-year stint on the grey list.
It is the culmination of a significant effort on the part of all stakeholders, over a number of years, to ensure the Cayman Islands has the most appropriate legislative and regulatory infrastructure to complement its position as the world’s leading financial services center.
In recent years, we have seen the Cayman Islands implement a number of significant changes with the aim of minimizing the risk of financial crimes within the jurisdiction. From the enforcement of beneficial ownership and tax reporting compliance set out in the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS), to putting in place stricter economic substance requirements.
The Cayman Islands has continued to demonstrate its efforts to fortify its AML/CFT regime as part of its broader commitment to aligning regulatory compliance to global standards which has seen it instigate the enforcement of effective, proportionate, and dissuasive sanctions, administrative penalties, and actions against obligated entities, ensuring timely remediation of any violations.
By removing the Cayman Islands from the FATF grey list, ideally the EU will follow suit shortly thereafter and remove the Cayman Islands from its list of non-cooperative jurisdictions for AML purposes. The most immediate and notable impact will be a reduction in due diligence requirements on Cayman-domiciled entities easing the administration burden when moving capital.
Together, these rulings mean that when it comes to establishing and maintaining entities in the jurisdiction, the Cayman Islands has regained its appeal not only as a practical choice, but also as a choice coupled with high regulatory standards.
As experts in entity life cycle management, Citco Trustees (Cayman) Limited pragmatically supports corporate, fund and private clients in need of Cayman-domiciled services.