|The Cayman Islands’ AML Regulations 2017 (AML Regulations), which came into effect on 2nd October 2017, introduced a number of new requirements for Cayman financial service providers, which includes Cayman investment funds.
The primary aim of the new requirements was to bring Cayman in line with international best practices. One of the most significant changes introduced by the AML Regulations that impacts Cayman funds is the requirement to appoint AML officers.
1. Designation/Appointment of MLRO, DMLRO and AMLCO for Funds
The AML Regulations require all Cayman funds to designate named individuals to perform the following functions:
- AML Compliance Officer (AMLCO)
- Money Laundering Reporting Officer (MLRO)
- Deputy Money Laundering Reporting Officer (DMLRO)
This represents a significant departure from the previous practice whereby Cayman funds were permitted to rely on the fact that their administrator had appointed its own internal AML officers to fulfil these roles.
2. Delegation/Reliance and AML Officer Functions
Subject to certain conditions being met, Cayman funds are still permitted to delegate the performance of any function outlined in the AML Regulations, but the Cayman Islands Monetary Authority (CIMA) has clarified, on a number of occasions, that each Cayman fund must now designate named individuals to perform the AML officer functions.
3. Practical Considerations
Subject to certain conditions being met, CIMA’s AML Guidance Notes state that one person can perform the role of AMLCO and MLRO. Therefore, at least two separate individuals must be designated.
Discussions have been taking place between industry representatives and CIMA regarding the practical implications of the new AML Regulations and the Guidance Notes for Cayman funds.
Industry discussions with CIMA are likely to continue and this could result in updates to the AML Guidance Notes. In the meantime, CIMA has allowed for a grace period to 30th September 2018 for Cayman funds to put in place the necessary arrangements to facilitate the appointment of the required AML officers.
4. Centaur’s AML Officer Services
Centaur provides experienced professionals to perform the roles of AMLCO, MLRO and DMLRO for funds.
These officers will be accountable to the board/governing body of the fund in respect of the following duties:
- Ensuring the fund has adequate procedures in place to comply with all aspects of the AML Regulations.
- Regularly requesting and reviewing information from the fund administrator and/or the investment manager to assess the money laundering and terrorist financing risks to which the fund may be exposed.
- Regularly requesting and reviewing information from the fund administrator and the investment manager to monitor anti-money laundering and anti-terrorist financing compliance.
- Receiving and investigating suspicious activity reports (SARs) and where deemed necessary, reporting such to the Cayman Financial Reporting Authority.
- Reporting to the board/governing body of the fund at its scheduled meetings on compliance with the AML Regulations.
- Conducting an annual review of the fund administrator’s and/or investment manager’s anti-money laundering and anti-terrorist financing procedures and controls.
- Performing periodic testing to verify the fund’s compliance with the AML Regulations.
For further information on these services, please contact Centaur’s Head of Risk and Compliance, Tracy Tookey: email@example.com