On November 21 2014 the Cayman Islands gazetted an amendment to the Money Laundering Regulations to include Cyprus in the Third Schedule to the regulations, which lists countries and territories with equivalent legislation for anti-money laundering purposes. The inclusion means that the Cayman Islands now recognises Cyprus as a jurisdiction with anti-money laundering legislation which is equivalent to that of the Cayman Islands.
Benefits of inclusion
The change means that Cypriot service providers to Cayman Islands funds (eg, fund administrators, brokers and custodians) can now undertake anti-money laundering procedure functions and provide other client-onboarding services for Cayman Islands funds and other institutions on-island without needing to delegate those to group offices or outsource them to service providers in other jurisdictions which are deemed equivalent.
Second, under Cayman Islands law it is now sufficient for Cypriot service providers to apply their own Cypriot anti-money laundering procedures, rather than needing to comply with Cayman requirements when introducing a client to Cayman institutions, acting as fund administrator or making equivalent arrangements. In the context of Cayman Islands funds, the board of directors, general partner or trustee of the fund can now rely on the anti-money laundering procedures of the Cypriot fund administrator and delegation of the anti-money laundering functions to a Cypriot fund administrator will allow the fund to satisfy its Cayman Islands legal and regulatory obligations.
Next, in certain cases Cypriot firms can now qualify as 'eligible introducers' in Cayman, so that Cayman Islands institutions can rely on the' know your client' process carried out by Cypriot service providers instead of carrying out separate procedures to comply with Cayman Islands law. Cayman Islands institutions may rely on the streamlined procedure where a client:
- remits funds from an account in its name with a Cypriot bank (known as the 'wire transfer' test); and
- is acting in the course of a regulated business which is based in or formed under the laws of Cyprus.
This change will undoubtedly create a variety of opportunities for cooperation between business in the Cayman Islands and Cyprus, and is likely to stimulate the market for Cayman funds and equivalent structures in Cyprus.
For further information on this topic please contact Aki Corsoni-Husain or Elina Mantrali at Harneys Aristodemou Loizides Yiolitis LLC's Limmasol office by telephone (+357 25 820020) or email (firstname.lastname@example.org or email@example.com). Alternatively, contact Christopher Hall at Harney Westwood & Riegels's London office by telephone (+20 7842 6080) or email (firstname.lastname@example.org) The Harney Westwood & Riegels website can be accessed at www.harneys.com.
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