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11/16/2017 |
Business |
AML Regulations to Take Effect on May 31, 2018 |
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Unregulated investment funds and some insurance entities in the Cayman Islands have been given a grace period until 31 May 2018 to establish anti-money laundering compliance programs under amended legislation that has just been passed by the Cayman Islands Government. This transitional period is a welcome move by the Government, in particular for unregulated investment funds such as private equity funds which were not previously expressly bound by the preceding regulations and some of which may not currently have compliant anti-money laundering and countering the financing of terrorism (AML/CFT) policies and procedures in place. Until earlier this year (as we noted in our earlier update), unregulated investment funds (which includes closed ended investment funds or ‘private equity’ funds) had not explicitly been caught by the Cayman Islands Proceeds of Crime Law and the Anti-Money Laundering Regulations (the AML Regulations). Under the new legislation, the list of activities which are classed as relevant financial business in or from the Cayman Islands (RFB) has been expanded to include an entity that is “otherwise investing, administering or managing funds or money on behalf of other persons”, bringing the classification in line with the FATCA 1 and CRS2 definitions of an investment entity and specifically including unregulated investment funds. Investment funds which are regulated under the Mutual Funds Law were, and remain, classed as conducting RFB and so are required to comply with AML/CFT legislation. The RFB list also now includes “underwriting and placement of life insurance and other investment related insurance”. Updated guidance notes3 are expected to be adopted later this year. These will include sector specific guidance for all businesses required to comply with the AML Regulations. We will issue further client updates once the revised Guidance Notes are in effect. Please contact your usual Harneys contact or visit www.harneys.com/Cayman if you have any questions or would like further advice on your AML obligations.
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