Saturday, October 31, 2020

CFATF anti-money laundering requirements to cost Cayman millions

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The Cayman Islands will have to spend millions of dollars in more law enforcement officers, government officials and training to meet the anti-money laundering requirements set forth by the Caribbean Financial Action Task Force (CFATF).

The jurisdiction was forced to come up with a “comprehensive action plan” to address shortcomings and avoid being placed on a CFATF greylist after the task force released a report that highlighted flaws in Cayman’s anti-money laundering and counter-terrorism financing regimes.

Estimates have not been publicly made about how much CFATF-mandated reforms will cost, but the number is in the millions. For instance, the territory has more than 10,000 registered funds that must now have anti-money laundering officers, a bill to be footed by the private sector.

“We have gotten quite an unfavourable report from the CFATF, so we are working across the full range of entities and agencies that are required to have those systems in place to improve them”

In the public sector, CFATF  requires Cayman more law enforcement focus on high-profile money laundering cases, more law enforcement officers and other government officials, plus training for those officers All of which will require millions of dollars in extra spending.

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Although money laundering offences are investigated and prosecuted, this involved almost exclusively minor domestic predicate offences. Given the shortcomings of national risk assessment, the CFATF report noted, this “may not be fully commensurate with [Cayman’s] risk profile.”

During Finance Committee proceedings in April, Premier Alden McLaughlin said his administration is prepared to spend “many of millions of dollars” to make sure Cayman can comply with international anti-money laundering standards.

“We have gotten quite an unfavourable report from the CFATF, so we are working across the full range of entities and agencies that are required to have those systems in place to improve them,” McLaughlin explained during the proceedings. “We have been placed in an observation period, have one year to get our systems up to satisfactory standard. If we don’t, we will be moved from observation status to a greylist – and then it gets worse from that,” local news outlet Cayman Islands Journal reported.

The premier proposed spending increases in multiple government departments at the Finance Committee hearings to bolster their anti-money laundering regimes. He asked legislators to approve about $4.7m in extra spending, including $610,000 of extra spending for the Border Control Services, $3m for the Cayman Islands Monetary Authority, $266,000 for the Department of Commerce and Investment, $228,000 for advice to the Attorney General’s Office and Cabinet, $374,000 for financial intelligence services, and $189,000 for law enforcement agencies.

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