Key Findings from Onsite Inspections of Registered Persons (2025-05-08)

Summary

This is a supervisory information circular from CIMA summarizing the findings of onsite AML/CFT inspections conducted on 113 Registered Persons (RPs) under the Securities Investment Business Act (SIBA) between January 2022 and March 2024. RPs include securities managers, advisors, brokers-dealers, arrangers and market makers who conduct securities investment business in or from the Cayman Islands. The circular does not create new rules but reports on compliance trends and reiterates existing obligations under the Anti-Money Laundering Regulations (AMLRs) and AML Guidance Notes.

Areas of Improvement

The circular notes overall improvement in RPs' AML/CFT frameworks since 2020, particularly in the following areas:

• Employee training: Improved since 2020.
• Board oversight: Improved since 2020.
• Outsourcing governance: Improved since 2020.
• Risk-based approach application: Improved since 2020.
• Internal reporting: Improved since 2020.
• Record keeping: Improved since 2020.

Persistent and Specific Weaknesses

• Customer Due Diligence (CDD) and ongoing monitoring documentation: Persistent and in some cases worsening weaknesses, found in 81% of RPs inspected.
• Independent AML/CFT audit function: Persistent and in some cases worsening weaknesses in maintaining an effective independent audit function, found in 63% of RPs inspected.
• Specific deficiencies: Also identified in sanctions screening, customer risk assessments, CDD documentation, ongoing monitoring, and simplified/enhanced due diligence measures across the sampled customer files.

The Authority uses the circular to remind all RPs, and more broadly all Financial Service Providers, of their existing regulatory obligations under the AMLRs and AML Guidance Notes. It states it has issued individual remediation requirements to inspected RPs and may take enforcement action, including administrative fines, for breaches. RPs are expected to self-assess against the findings even if they were not personally inspected, and the circular is not a substitute for confirmation that an RP has met its individual requirements.

Applies to

Registered Persons (securities investment business licensees under SIBA), Securities Managers, Securities Advisors, Broker-Dealers, Securities Arrangers, Market Makers, Financial Service Providers (broader reference)