Following the Cayman Islands removal from the Financial Action Task Force’s Grey List of jurisdictions subject to increased monitoring in relation to anti-money laundering (“AML”) and countering the financing of terrorism (“CFT”) in October 2023 (further detail on which is available here), on 18 January 2024 the European Union updated its own list of high risk third countries and, as anticipated, the Cayman Islands was removed from this list. This will take effect in early February.
In addition, the Cayman Islands has been removed from the UK list of high-risk countries for AML and CFT purposes with effect from 5 December 2023.
This update is very welcome news for the Cayman Islands in respect of its EU client base. EU financial institutions will no longer be prohibited from establishing new securitisation special purpose entities in the Cayman Islands in accordance with Article 4 of the EU Securitisation Regulation. The update also clears the way for Cayman funds to continue to be marketed into the EU under the AIFMD.
Relevant financial institutions subject to the EU AML/CFT regime or the UK AML/CFT regime will no longer need to apply enhanced customer due diligence measures to business relationships and transactions involving the Cayman Islands.
A copy of the Cayman Islands Ministry of Financial Services press release is available here.