Legislative changes proposed to strengthen CIMA’s AML enforcement, information sharing

The Ministry of Financial Services has released seven bills proposing to strengthen the Cayman Islands Monetary Authority’s (CIMA) powers to apply proportionate and dissuasive sanctions to all types of legal persons under its supervision.

The bills, published on 27 March in The Cayman Islands Gazette, are: 

·         Monetary Authority (Amendment) Bill, 2023;

·         Companies Management (Amendment) Bill, 2023;

·         Directors Registration and Licensing (Amendment) Bill, 2023;

·         Insurance (Amendment) Bill, 2023;

·         Money Services (Amendment) Bill, 2023;

·         Securities Investment Business (Amendment) Bill, 2023; and the

·         Virtual Asset (Service Providers) (Amendment) Bill, 2023.

The bills aim to extend CIMA’s sanctions regime to certain legal persons that fall under its supervision, namely partnerships, exempted liability partnerships (ELPs), limited liability partnerships (LLPs), partners of such partnerships, and unincorporated associations other than a partnership, as well as the persons concerned in the management or control of such associations.

In addition, amendments to the Monetary Authority Act would allow CIMA to spontaneously share non-public information of criminal conduct it uncovers with overseas regulators.

The Monetary Authority (Amendment) Bill, 2023

The Monetary Authority (Amendment) Bill, 2023 expands CIMA’s powers to impose administrative fines for breaches of the Monetary Authority Act.

The fines for partnerships, limited liability partnerships, exempted limited partnerships and unincorporated associations are the same as for companies: up to $100,000 for serious breaches and up to $1 million for very serious breaches.

Under the bill, the procedures for imposing and enforcing fines and appeals against decisions are defined by Cabinet regulations. The regulations also detail when breaches are classed as minor, serious or very serious.

In addition, the bill introduces clauses that propose to enhance international cooperation with overseas regulatory authorities.

This will allow CIMA to provide these authorities with information, either proactively or upon request, relating to criminal conduct it discovers during the performance of its regulatory functions for regulated entities.

Other clauses simplify the exchange of information between CIMA and the Competent Authority, which is designated by the minister as the General Registry.

Further changes extend the application of the disgorgement principle not just to licensees but to “all persons regulated under the regulatory laws and those connected with them”, to prevent anyone who breaches this law from gaining financially.

The release of the bills follows an industry consultation carried out in 2021.

In a press release, Financial Services Minister André Ebanks said ultimately the bills intend to improve Cayman’s AML enforcement regime, and to further strengthen local and international cooperation.

“This maintains the integrity of the local and international financial services industry,” he added.

Minister Ebanks will present the amendment bills at the next sitting of Parliament, expected at the end of April.

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