The updated Guidance Notes raised a number of questions, some of which CIMA is still considering. However, CIMA has recently confirmed the following:
1. Designation of Money Laundering Reporting Officer (MLRO), Deputy Money Laundering Reporting Officer (DMLRO) and Anti-Money Laundering Compliance Officer (AMLCO).
All Cayman domiciled funds will be required to appoint natural persons at managerial level to act as MLRO, DMLRO and AMLCO.
The same person can act as AMLCO and either MLRO or DMLRO. The MLRO and the DMLRO must be two separate individuals. All such appointments have to satisfy the relevant criteria set out in the Guidance Notes.
Funds may delegate these roles and examples of persons that can be appointed include:
the directors of the fund;
employees of the investment manager;
employees of the administrator; or
employees of other service providers.
For existing funds, these appointments have to be in place by 30 September 2018 and CIMA regulated funds have to file the names of the appointed individuals with CIMA by such date. Any new fund that is registered on or after 1 June 2018 must provide the names of the appointed individuals at the time of the submission of the registration application.
2. Gap Analysis
Where AML functions are delegated to a regulated service provider in a foreign country or territory which is recognised by the Cayman Islands as having an equivalent AML/CTF regime (an Approved Country), funds will be expected to demonstrate that they have considered the suitability of the delegate and its AML/CFT programme.
There is no expectation of a granular comparison between the Cayman Islands AML regime and that of an Approved Country, however, a gap analysis should be conducted to determine whether the outcome of applying the Cayman Islands regime and that of the Approved Country would be the same. This is to ensure that a fund has duly considered country risk as part of its risk based approach.
3. Unregulated Investment Entities
Unregulated investment entities must also appoint a MLRO, DMLRO and AMLCO by 30 September 2018 (extended from the previous deadline of 31 May 2018). There is still no sector-specific guidance, but such guidance is currently being developed by CIMA, in consultation with industry representatives, and will be published in due course.
While we wait for further clarifications and updates to the Guidance Notes, we would recommend that existing funds review their current AML/CTF policies and procedures or any delegation arrangements and take steps to ensure that MLROs, DMLROs and AMLCOs are appointed by the specified date.