The European Union has published a revised list of high-risk countries for anti-money laundering (AML) purposes in its Official Journal on 18 Jan 2024.
The annex to delegated regulation 2016/1675 no longer includes the Cayman Islands.
Financial institutions in the EU are typically required to apply enhanced due diligence measures to transactions with entities from listed countries.
In its amendments released on 12 Dec 2023, the EU Commission recognised Cayman’s successful completion of its Financial Action Task Force (FATF) review process in October 2023.
“The Cayman Islands and Jordan have strengthened the effectiveness of their AML/CFT regimes and addressed technical deficiencies to meet the commitments in their action plans on the strategic deficiencies identified by the FATF,” the regulation states.
“The Commission’s assessment of the available information leads it to conclude that the Cayman Islands and Jordan no longer have strategic deficiencies in their AML/CFT regimes. It is therefore appropriate to delete the Cayman Islands and Jordan from the table in point I of the Annex to Delegated Regulation (EU) 2016/1675.”
The updated EU AML list, and Cayman’s removal, will become effective 20 days after publication in the EU’s Official Journal on 7 Feb.
Cayman Finance CEO Steve McIntosh credited public and private sector leadership for the progress that led to this important achievement.
“The Cayman Islands Government and financial services industry share a solid commitment to ensuring that our jurisdiction meets global standards while protecting the rights of investors, asset managers, and other clients.
“The EU’s acknowledgement of the strength of the Cayman Islands’ AML regime is just the most recent example of how we collaborate to translate that commitment into an effective legal and regulatory framework.”
The EU’s decision will lead to a reduction in enhanced due diligence for many entities and improve choices for investors.
The EU’s action also means Article 4 of the EU Securitisation Regulation will no longer prohibit the establishment of securitisation special purposes entities (SSPEs) in the Cayman Islands. Investors will be able to choose to use a SSPE in the Cayman Islands or any other jurisdiction not featuring on the EU AML list.
“Ensuring our legal and regulatory regime meets global standards opens up new opportunities for investors,” concluded McIntosh. “We look forward to using this development to promote the Cayman Islands financial services industry as an innovative leader that offers stability and growth.”
Deputy Premier and Minister for Financial Services André Ebanks said in a press release, “The Cayman Islands Government fully understands the significance of this achievement, and what it means for our international reputation.
“My Government colleagues and I are profoundly thankful for the dedication of the many civil servants, regulators and industry members who walked the talk, earning our regime this recognition as a sound place for business. And we reaffirm our commitment with each milestone we achieve.”
In addition to local stakeholders, the deputy premier thanked EU officials.
“Discussions between the EU and the Cayman Islands – on a range of financial services- related matters, including our delisting – have been incredibly useful in deepening our mutual understanding, and I particularly note the positive, open approach that increasingly characterises our relationship. Being removed from the EU’s AML list paves the way for further dialogue on the policy goals we pursue.”
