Updated FATF list of countries under increased monitoring includes Burkina Faso, Morocco and Senegal

The Financial Action Task Force (FATF) has placed The Cayman Islands under greater scrutiny, as a result of more deficiencies identified in its Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) regime.

The FATF, which is regarded as the international police for AML/CTF matters, has taken The Cayman Islands to task over its AML/CTF regime, which could potentially require local firms to ‘terminate’ some business relationships connected to the Caribbean jurisdiction.

In the meantime, the FATF and The Cayman Islands are actively working with it to address ‘strategic deficiencies’ in the jurisdiction’s anti-money laundering and terrorist financing.

The FATF has just released its updated list of jurisdictions under increased monitoring, which includes The Cayman Islands, Burkina Faso, Morocco and Senegal. The FATF said jurisdictions on this list were actively working with it to address ‘strategic deficiencies’ in their anti-money laundering and terrorist financing regimes swiftly within agreed timeframes and subject to extra checks.

The Guernsey Financial Services Commission has now amended its handbook on countering financial crime and terrorist financing to reflect FATF’s updated list. The amendments include the removal of The Cayman Islands from the list of equivalent jurisdictions and its addition to the list of countries and territories which may present a higher risk of money laundering and terrorist financing.

Instruction issued for businesses with September deadline

An instruction has also been issued to all specified businesses setting out steps to be taken before the end of September in respect of business relationships they have which are connected to The Cayman Islands. These steps include reviewing relationship risk assessments for all existing business relationships where The Cayman Islands is a relevant risk factor and apply full customer due diligence measures if previous concessions have been used.

Mitigation measures should also be taken where the level of risk has changed. According to Guernsey Financial Services, similar action is also being taken in the other Crown Dependencies, recognising there may be ‘exceptional circumstances’ where the amended requirements cannot be completed.

However, specified businesses should ‘terminate’ the business relationship where customer due diligence cannot ultimately be completed and consider whether a disclosure should be made to the financial intelligence service, which is part of the Bailiwick’s economic crime division. Guernsey Financial Services points out that it will review the action taken by specified businesses to comply with this instruction during on-site inspections and by other supervisory means as necessary.