The Cayman Islands, three islands located in the western Caribbean, lack the capacity to spot money laundering and terrorism financing. This is a major fault considering the Cayman’s role as an international financial center.
The Caribbean Financial Action Task Force (CFATF) took control over the evaluation of this region in 2017, when they visited the Cayman Islands to compile a report on the deficiencies. This report specifically analyzed how the Cayman Islands complied with 40 Financial Action Task Force standards in relation to combating money laundering and terrorism financing. The Cayman evaluation was discussed by the CFATF and Plenary was held in November of 2018 in Barbados and published by March of 2019. The CFATF found much during their evaluation of Cayman.
They discovered that while the Inter Agency Coordination Committee and the Anti-Money Laundering Steering Group are a strong combination, they could use more cooperation with law enforcement organizations and the Financial Reporting Authority.
They also found that even though Cayman does work to investigate and prosecute those participating in money laundering, a large majority found are minor offenses and the assists seized using civil forfeiture could be more aggressive. While having plenty of resources, the Royal Cayman Islands Police Service and the Office of the Director of Public Prosecutions seem unable to fully pursue larger and more complex investigations and prosecutions. On top of that, the Financial Reporting Authority is lacking the proper tools to assist.
The CFATF report states, “The result is that there is a low level of usage of FRA’s disclosures to supplement investigations, and they have been used to a negligible extent to initiate investigations,”.
All of these factors show a fundamental fault when it comes to identifying situations involving money laundering and terrorism financing investigations. To the credit of the Cayman Islands, the CFATF did remark on their commitment to ensuring that the proper anti-money laundering framework be in place and that it will be as effective as possible in safeguarding finances.
The Cayman government has responded to this CFATF report by bringing together a task force made up of the premier, the attorney general, the deputy governor, and the ministers for financial services, commerce, and finance. These powers will work as one to administer a plan of action with several initiatives aimed at identifying, understanding, and remedying the Cayman financial risk shortcomings. There is hope that this plan will be implemented within a year. The FATF International Cooperation Review Group will issue another report on the progress after 12-months of observation.
Premier Alden McLaughlin states, “The Cayman Islands remain fully committed to upholding the highest global standards on money laundering and terrorist financing.”. He then added, “Our anti-money laundering and counter-financial terrorism action plan will send a clear signal that we intend to maintain those standards.” and elaborations that “Work is already underway to improve information gathering, more rigorously monitor financial activity and enhance enforcement including the confiscation of assets.”.
Those who are interested in learning more information about similar cases or looking to keep up-to-date on the latest legal cases and proceedings, please visit the Jeffrey Newman Law Whistleblower Help Center and blog!