Appointment of MLRO AMLCO For Funds (2019-02-01)

Summary

This CIMA general industry notice clarifies obligations for Cayman Islands funds and other persons carrying out relevant financial business (RFBs) under the Anti-Money Laundering Regulations (AMLRs) regarding appointment of an Anti-Money Laundering Compliance Officer (AMLCO), Money Laundering Reporting Officer (MLRO) and Deputy MLRO (DMLRO). It confirms that a fund may designate the same individual to act as both AMLCO and MLRO provided that person is competent and has sufficient time to perform both roles, referencing the December 2017 AML/CFT Guidance Notes.

Delegation and Reliance Arrangements

The notice addresses delegation and reliance arrangements under regulation 3(2) of the AMLRs, stating that delegation or reliance on another person to perform AML functions can only occur after the natural person designations (AMLCO/MLRO/DMLRO) have first been made.

Reliance expectations: The Authority expects risk assessment of the person relied upon, formal agreements, and review of policies and procedures.
Eligible Introducers: It clarifies expectations around gap analysis when relying on Eligible Introducers from AMLSG-listed jurisdictions.
Regulation 23: It clarifies that regulation 23 does not fully exempt RFBs from identity verification, particularly for onward payments, requiring full customer due diligence where regulation 23(2) criteria are met.

Practical Considerations

The notice restates a prior compliance deadline: all funds were required to designate an MLRO, DMLRO and AMLCO and demonstrate this via the Authority's REEFS portal by September 30, 2018, with funds registering on or after June 1, 2018 required to demonstrate compliance at the time of their registration application. The notice indicates CIMA intends to amend the December 2017 Guidance Notes to align them more closely with the AMLRs.

Key obligations

Funds doing business in or from the Cayman Islands must designate a natural person at managerial level to act as AMLCO, MLRO and DMLRO.
Funds must demonstrate compliance with the AMLCO/MLRO/DMLRO designation requirement to the Authority via the REEFS portal.
Funds registering as at June 1, 2018 must demonstrate compliance with the designation requirement at the time of submitting their registration application via REEFS.
RFBs delegating any AMLR function must first designate the AMLCO/MLRO/DMLRO in accordance with regulations 3(1) and 33, and must apply the outsourcing principles in Part II, Section 10.C of the December 2017 Guidance Notes.
RFBs relying on a person to perform an AMLR function should ensure the person has adequate knowledge/expertise, conduct a risk assessment before placing reliance, have a formalised agreement setting out responsibilities, review and periodically test the person's policies and procedures, and ensure the person applies Cayman Islands standards where operating from a jurisdiction with lower AML standards.
RFBs relying on Eligible Introductions from AMLSG-listed jurisdictions must document and demonstrate their consideration of country risk as part of a risk-based approach.
RFBs must conduct full customer due diligence where a transaction meets any criteria in regulation 23(2), including verifying identity for onward payments.

Applies to

funds, persons carrying out relevant financial business (RFBs), financial service providers (FSPs)

Deadlines

September 30, 2018: Deadline for all funds to designate an MLRO, DMLRO and AMLCO and demonstrate compliance via the Authority's REEFS portal.
June 1, 2018: Funds registering on or after this date must demonstrate compliance with the AMLCO/MLRO/DMLRO designation requirement at the time of submitting their registration application via REEFS.