The Cayman Islands Monetary Authority ("CIMA") has published FAQs (the "FAQs") in respect of the application of certain AML compliance obligations of Cayman Islands funds. These focus on the requirements regarding the AML Compliance Officer, Money Laundering Reporting Officer and Deputy Money Laundering Reporting Officer (together, "AML Officers") , including addressing the suitability, knowledge and independence criteria for AML Officers designated by funds and the formalities for registering AML Officers via the CIMA REEFS portal. While all funds carrying out relevant financial business must designate appropriate AML Officers, only those funds that are regulated by CIMA are required to register certain details regarding those AML Officers with CIMA.
As noted in our client update of 18 April 2018, each Cayman Islands fund in existence before 1 June 2018 (a "Pre-June Fund") has until 30 September 2018 to designate entity specific AML Officers (and, where registered with CIMA, to register the details of such officers with CIMA), while funds launched after 1 June ("New Funds") are expected to have AML Officers designated from the outset. New Funds who are required to register with CIMA will be required to register details of their AML Officers at the time of fund registration.
Operators of Pre-June Funds and soon to launch funds that have yet to designate and / or register details of the fund's AML Officers ought to give the matter urgent consideration, as the process for selecting and appointing AML Officers may take time. Should fund operators wish to appoint AML Officers provided by external service providers (e.g. fund administrators or investment managers), such designations should be confirmed as soon as possible, as bottlenecks can be anticipated as the 30 September deadline approaches.
The FAQs confirm that funds that are not regulated by CIMA are required to make AML Officer appointments within the same timeframes, albeit there is currently no requirement to register details of such appointments with CIMA.
Registered funds that are in LUT / LUL status are not generally required to appoint AML Officers. However, funds that are de-registering from CIMA on the basis that the fund equity interests are sufficiently closely held to meet the requirements of section 4(4) of the Mutual Funds Law (2015 Revision), or that the fund is now a closed-ended fund, will still be conducting "relevant financial business" both during and after de-registration and so will need to designate AML Officers (and, for so long as they remain in LUT, register relevant details with CIMA).
CIMA licensed or registered funds that have not registered AML Officers by the deadline may be the subject of enforcement action.
Further revisions to the Guidance on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands are still under consideration by CIMA, having been the subject of industry consultation.