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Cayman Islands issues general sanctions licence for funds industry

On 4 October 2022 the Governor of the Cayman Islands issued General Licence GL/2022/0001 for the Cayman Islands Funds Industry (the “General Licence”) which provides relief from aspects of the financial sanctions imposed in the Cayman Islands by the Russia (Sanctions) (Overseas Territories) Order 2020 (the “Order”). The issue which the General Licence addresses is where a Designated Person owns more than 50% of an investment fund which has hitherto meant that the fund is paralysed and all of its assets are frozen. This affected minority non-designated investors in such funds who could not redeem their shares and also prohibited the frozen funds from complying with many of their statutory obligations such as the payment of registered office fees. This was clearly an unintended and unjust effect of the sanctions regime on the Cayman funds industry and we commend the Cayman Financial Reporting Authority for its painstaking work in delivering what is the Cayman Islands’ first ever general sanctions licence.


Broadly, the Order applies the United Kingdom Russia (Sanctions) (EU Exit) Regulations 2019 (the “Regulations”) in the Cayman Islands with a number of modifications. The key prohibitions imposed by the Regulations are:

  • dealing with assets owned, held or controlled by a Designated Person;
  • making funds available to or for the benefit of a Designated Person; and
  • making economic resources available to or for the benefit of a Designated Person.

A Designated Person is any person (whether an individual or a corporate person) who has been designated by the United Kingdom Secretary of State.[1] “Dealing with”, “funds” and “economic resources” are each defined in very broad terms, and these prohibitions also apply to any person controlled directly or indirectly by a Designated Person.

To date, the effect of these prohibitions has been that:

  • any Cayman Islands Fund in which the majority investor(s) is or are Designated Persons is itself frozen;
  • any other non-designated investor(s) in such a Fund cannot withdraw their investment;
  • neither the Fund nor its manager can deal with the Fund’s assets (including continuing to trade or invest them); and
  • the Fund cannot make any payments, including of statutory or regulatory fees (for example annual registration fees) or to service providers to the Fund (for example its auditors or Registered Office provider).

The General Licence

The General Licence applies to Relevant Investment Funds, meaning investment funds incorporated or established in the Cayman Islands or certain other licenced entities, which are themselves frozen due to being owned or controlled directly or indirectly by a Designated Person.

The General Licence allows:

  • Non-designated investors to be redeemed out of an otherwise frozen Fund (with the interests of any designated investors and the Fund itself remaining frozen); and
  • The Fund or its manager to make payments for:
    • the Fund’s basic needs (including insurance premiums, audit and accounting fees, corporate and regulatory fees, corporate services and registered office fees, directors fees, professional service provider fees and any other routine expenses);
    • reasonable fees or service charges arising from the routine holding and maintenance of the Fund’s frozen funds or economic resources; and
    • reasonable professional fees for the provision of legal services to the Fund, or reasonable expenses associated with the provision of legal services to the Fund.

Any redemption from the Fund by non-designated investors must be in accordance with the General Licence and the Relevant Investment Fund’s constitutional and contractual documents, and no funds or economic resources may be made available directly or indirectly to or for the benefit of any Designated Person (including any person owned or controlled directly or indirectly by a Designated Person).

The General Licence has effect from 4 October 2022 to 4 April 2023, and may be varied, revoked or suspended by the Governor of the Cayman Islands at any time.

A Relevant Investment Fund or a Fund Manager must report to the Governor of the Cayman Islands as soon as practicable the first time the General Licence is relied on, and subsequently must report to the Governor on the 16th of each month setting out any activities from the previous month which were conducted under the General Licence.

In respect of funds which are regulated by the Cayman Islands Monetary Authority (“CIMA”), CIMA must also be notified within three business days of the use of the licence.

Any Relevant Investment Fund or Fund Manager which is conducting activities or making payments in accordance with the General Licence must keep accurate, complete and readable records of any such activity for a minimum of six years.

Campbells has significant experience advising in relation to sanctions matters, including the Regulations and the Order. If you have any questions regarding the General Licence, or any other sanctions matter, please reach out to any of the authors.

Copies of the General Licence and the accompanying notice from the Governor’s Office are available here and here.

[1] A complete list of Designated Persons is available at:

Paul Kennedy - Counsel, Campbells Grand Cayman - Litigation, Insolvency & Restructuring

Paul Kennedy

+1 345 914 5872

Sam Keogh

Senior Associate
+1 345 914 6926