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18 December 2017
Unregulated investment funds and some insurance entities in the Cayman Islands have been given a grace period until May 31 2018 to establish anti-money laundering compliance programmes under recent amended legislation.
This transitional period is a welcome move, particularly for unregulated investment funds such as private equity funds which were not previously expressly bound by the preceding regulations and therefore may not have compliant anti-money laundering or counter-terrorist financing policies and procedures in place.
Until earlier this year unregulated investment funds (including closed ended investment funds and private equity funds) had not explicitly been caught by the Cayman Islands Proceeds of Crime Law and the Anti-money Laundering Regulations (for further details please see "New Anti-money Laundering Regulations come into force"). Under the new legislation, the list of activities which are classed as relevant financial businesses in or from the Cayman Islands has been expanded to include entities that are "otherwise investing, administering or managing funds or money on behalf of other persons", bringing the classification in line with the Foreign Account Tax Compliance Act(1) and Common Reporting Standard(2) definitions of 'investment entity' and specifically including unregulated investment funds. Investment funds which are regulated under the Mutual Funds Law remain classed as conducting relevant financial business and are therefore required to comply with anti-money laundering and counter-terrorist financing legislation. The relevant financial businesses list now includes "underwriting and placement of life insurance and other investment related insurance".
Updated guidance notes are expected to be adopted before the end of 2017.(3) These will include sector-specific guidance for all businesses required to comply with the Anti-money Laundering Regulations.
For further information on this topic please contact Jonathan Culshaw at Harneys' Hong Kong office by telephone (+852 5806 7800) or email (email@example.com). Alternatively, contact Patrick Colegrave or Christopher Hall at Harney Westwood & Riegels's London office by telephone (+44 20 7842 6080) or email (firstname.lastname@example.org or email@example.com); or Matt Taber at Harneys' Cayman office by telephone (+1 345 949 8599) or email (firstname.lastname@example.org). The Harney Westwood & Riegels website can be accessed at www.harneys.com.
(1) The US Foreign Account Tax Compliance Act is the intergovernmental agreement between the United States and the Cayman Islands and the Cayman Islands Tax Information Authority (International Compliance) (United States) Regulations (as revised).
(2) The Organisation for Economic Cooperation and Development-sponsored Multilateral Competent Authority Agreement and certain bilateral agreements or tax treaties regarding the common reporting standard on the automatic exchange of information, the Tax Information Authority (International Tax Compliance) (Common Reporting Standard) Regulations (as revised).
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