Important changes for Cayman Islands Structured Finance SPVs – AML Regulations, Sep 2018

September 2018

The Cayman Islands has recently made changes to its Anti-Money Laundering (AML) regime. The Anti-Money Laundering Regulations (2018 Revision) (AMLRs) came into force in the Cayman Islands in October 2017, replacing the Money Laundering Regulations (2015 Revision) (MLRs).

It is generally accepted that most structured finance SPVs fall within the definition of “relevant financial business” (as per Schedule 6 of the Proceeds of Crime Law (2018 Revision)) therefore need to appoint natural persons in the required roles of Anti-Money Laundering Compliance Officer (AMLCO), Money Laundering Reporting Officer (MLRO), and Deputy Money Laundering Reporting Officer (DMLRO), by or before 30 September 2018.

How it could affect SPVs

Based on how Cayman’s AML regime is designed, the Cayman Islands Monetary Authority (CIMA) currently requires SPVs to appoint the AMLCO, MLRO, and DMLRO. CIMA requires that SPVs should prove their compliance with the AMLRs via a valid contract with a licensed service provider for the required appointments.

Consequences of Non-Compliance

Any person who contravenes the AMLRs commits an offence and is liable on conviction to a fine of up to US$ 609,756 (previously US$ 6,097.56 under the MLRs) or imprisonment for two years.

Roles and Responsibilities

The MLRO role is a management level role with substantial responsibilities. The DMLRO role should be an individual of similar status and experience to the MLRO and acts as deputy in the absence of the MLRO. The responsibilities of the MLRO and the DMLRO include, but are not limited to, assessing suspicious activity reports in relation to money laundering or terrorist financing activities, and determining whether to report these activities to the Cayman Islands Financial Reporting Authority (FRA).

The AMLCO is to maintain oversight of the compliance function. An independent reporting line must be maintained and the AMLCO should have full autonomy.

The mentioned roles and compliance function can be outsourced to a service provider which is regulated for AML purposes in a recognised jurisdiction with equivalent standards to the AMLRs. A natural person may act in one or more of these roles, except for the DMLRO role which cannot be held by the same natural person who is the MLRO.

How Vistra can support

We will support and guide you through the new regulations. If you have any questions or need advice on the changes of the AML regime, please contact your usual Vistra representative or email [email protected]