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Cayman Islands - KYC Requirements Summary




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2020.

2020 Who?


This year has been a hard and interesting year for all. With Covid-19 dominating the news, many have seen their lives transformed. In the flurry of lockdowns, and restrictions being lifted, the financial cogs of the world have been quietly turning. As our attention has been shifted to the harsher realities of 2020, important events have taken place in the KYC world. One of which has been the recent amendments made by Cayman Islands Monetary Authority (CIMA) to their Anti-Money Laundering (AML) Regulations.

Many of us know the Cayman Islands as a significant offshore tax-heaven; but not often are the regulatory requirements discussed with respect to such jurisdictions. This article aims to provide a summary of the current Know Your Customer (KYC) requirements with respects to the Cayman Islands:

1) Equivalence: Formerly a consideration in determining whether or not it was appropriate to apply simplified due diligence on a given applicant, CIMA published a list from the Cayman Islands Anti-Money Laundering Steering Group (commonly referred to as the "Equivalent Jurisdiction List"). Since 5 August 2020, the Equivalent Jurisdiction List is no longer a factor, and instead, the jurisdiction of the applicant for business will need to be assessed by the Cayman Islands’ financial service provider or its AML/Combating the Financing of Terrorism (CTF) service provider.


2) Risk Based Approach: In line with many jurisdictions [1], especially those domiciled within the European Union (EU), the risk-based approach is applied to all entities. A person carrying out relevant financial business transactions should take steps appropriate to the nature and size of the business to identify, assess, and understand its money laundering and terrorist financing risks in relation to the following:


  • A customer of the person;

  • The country or geographic area in which the customer resides or operates;

  • The products, services, and transactions of the person; and

  • The delivery channels of the person [2].


3) General Requirement of the CDD: Customer due diligence (CDD) is required, (in line with EU standards), for the following, when a person/company is:


  • Establishing a business relationship;

  • Carrying out a once-off transaction valued more than ten thousand dollars, including a transaction carried out in a single several operations of smaller value that appear to be linked;

  • Carrying out a once-off transaction as a wire transfer;

  • Suspected of money laundering or terrorist financing; or

  • Doubtful about the veracity or adequacy of previously obtained customer identification data [3].