Beneficial Ownership Transparency Bill – passed

Following the recent removal of the Cayman Islands from the Financial Action Task Force’s (FATF) grey list, on November 23, the Cayman Islands passed the Beneficial Ownership Transparency Bill 2023.

The aim of the Bill is to better align the beneficial ownership regime more closely with the Cayman Islands’ anti-money laundering regulations and consolidate and enhance Cayman’s beneficial ownership rules in line with evolving global standards and consolidates the framework in a single act.

In addition to various updates and amendments, the new Act combines the beneficial ownership rules of the Companies Act, the Limited Liability Companies Act, and the Limited Liability Partnership Act in a single piece of legislation.

The Bill will not, however, extend access to beneficial ownership registers to the general public. Such access could only be implemented if and when further regulations are made and approved by Parliament.

Expected to be in force by the end of 2023, with implementing regulations to follow in a phased approach during the first half of 2024, the new law will bolster the Cayman Islands’ continuing commitment to transparency while also protecting privacy and confidentiality.

The primary changes are to: introduce a new definition of beneficial owner; bring additional forms of legal entity within scope; remove and replace existing exemptions; and introduce additional line items for reporting purposes.

It is noted that for exemptions previously relied upon, legal persons will be required to undertake an analysis and provide written confirmation to their corporate services provider to inform them of the chosen “alternative route to compliance”.

Crucially, a licensed fund administrator or contact person in respect of private and mutual funds will need to make requested beneficial ownership information available within 24 hours of a request being received.

Affected entities and their corporate service providers will need to update their systems and processes urgently in order to satisfy these new requirements.

Proceeds of Crime (Amendment) Act 2023 – gazetted

The Proceeds of Crime (Amendment) Act 2023 was gazetted on October 6, a move which indicates the commencement of a consent framework designed to introduce specific anti-money laundering (AML) defences conditional on obtaining consent for certain actions.

The Act will be beneficial to financial institutions, particularly banks and payment service providers.

The Amendment Act is not yet in force, however. The timing of its enactment will depend on the Cayman Islands Financial Reporting Authority, which will determine when it deems it has a functional consent regime.

The Amendment Act will amend the Proceeds of Crime Act (2020) Revision.  Some of the changes will mean a reform to the provisions relating to intelligence gathering and sharing, and investigations; provide protection against liability for persons appointed as supervisory authorities; ensure that the principal Act conforms to international best practices; and modernise the conduct of prosecutions, which includes clarifying the evidential basis on which it may be shown that property is criminal property or is obtained through unlawful conduct.

Changes for Mutual Funds and Private Funds – CIMA

On 8 November 2023, the Cayman Islands Monetary Authority (CIMA) published a general industry notice to advise that it plans to implement changes to monitoring and reporting for Mutual Funds and Private Funds. CIMA said it wants to enhance monitoring and improve the reporting accuracy of the regulated Mutual Funds’ and Private Funds’ investment strategies.

The Regulatory Enhanced Electronic Forms Submission (REEFS) portal will undergo modifications, including the removal of certain Investment Strategy categories and the addition of more detailed classifications. These changes will impact the information required when registering funds.

CIMA said it wants to support improved statistical reporting on the underlying investment strategies of the funds. Specifically, in response to global Environmental, Social, and Governance (ESG) initiatives, CIMA is seeking to improve identification, measurement, and management of ESG-related risks.

The updated Investment Strategy list includes both removals and additions, with revised categories for clarity. Fund registration and Fund Annual Return (FAR) submissions must adhere to the revised list from 15 November 2023.

For more information, CIMA’s notice can be found accessed here.

CIMA allows remote on-boarding (e-KYC)

As previously noted, in August 2023 the Cayman Islands Monetary Authority (CIMA) issued updated Guidance Notes on the Prevention and Detection of Money Laundering, Terrorist Financing and Proliferation Financing in the Cayman Islands. These replaced the previous version issued by CIMA on 5 June 2020, as supplemented in February 2021 and May 2021.

One key change is that financial service providers are now permitted to undertake remote on-boarding and ongoing monitoring of business relationships, including by way of e-KYC and digital identification systems, provided that the guidance in the Updated Guidance Notes is followed.

However, before adopting e-KYC or remote onboarding, financial service providers must conduct a risk assessment of the technology used and consider cyber security and fraud risks.

It is significant because this now permits financial service providers to establish new business relationships via technology solutions and non-face-to-face means where the customer is not physically present. They can also conduct ongoing monitoring of business relationships, including by way of e-KYC methods and digital ID systems, provided that the guidance in the Updated Guidance Notes is followed.

Notably, video conferencing is permitted to identify natural persons, however, as this is non-face-to-face business, it is expected that additional verification would be undertaken to ascertain the veracity of the CDD provided.

The move has broadly been welcomed by industry as it provides increased flexibility and efficiency for financial service providers and their customers.

CIMA issues warning notices on DRLA

During the last quarter, CIMA has issued warning notices in relation to breaches of the Directors Registration and Licensing Act, 2014 (as amended) (DRLA) and has sought to cancel the license of directors who have failed to comply with the requirements of the DRLA.

Furthermore, warning notices have been issued against an entity which has not complied with the Securities Investment Business Act (2020 Revision) (SIBA).

Both of these noticed serve as a timely reminder of the requirements to comply with the DRLA and pay the annual license fee by 15th January of each year via

For SIBA entities, please refer to an article previously prepared by Laura McGeever, Director which serves as a reminder of the various compliance requirements.