SIBL Excluded Persons Risk Assessment (2020-03-06)

Summary

This is a General Industry Notice issued by CIMA on 6 March 2020 communicating the results of a national risk assessment of Excluded Persons registered under the Securities Investment Business Law (SIBL), referred to as "SIBL EPs." The assessment was conducted in 2019 in response to findings in the CFATF Mutual Evaluation Report that the Cayman Islands lacked sufficient data to assess ML/TF risks in this sub-sector.

• Data basis: Data was collected from 2,372 SIBL EPs, representing a 94% response rate, across five risk categories.
• Overall rating: CIMA rated the sub-sector overall as Medium-High risk for money laundering/terrorist financing.
• Geographic exposure: Rated Medium-Low.
• All other categories: Rated Medium-High.

The notice also explains that, effective 15 January 2020, the SIBL Excluded Persons category was abolished. Entities previously operating under it that wished to continue business had to apply to re-register with CIMA as "Registered Persons," becoming subject to full authorisation, AML/CFT supervision, onsite inspections, reporting requirements, and fitness and propriety assessments similar to other CIMA-regulated financial service providers.

The notice directs Registered Persons, their service providers, and other entities conducting relevant financial business with them to review the underlying SIBL EP Risk Assessment report and ensure their own internal risk assessments are consistent with (though not necessarily identical to) its findings. This includes incorporating national-level risk factors and implementing mitigation procedures where higher-risk products, services, customers, jurisdictions or delivery channels identified in the report are relevant to their business.

Key obligations

• Registered Persons and their service providers must review the SIBL EP Risk Assessment report to understand its contents and findings.
• Registered Persons must ensure their own AML/CFT risk assessments are consistent with the national SIBL-EP risk assessment, incorporating its risk factors (differences from it should be explained).
• Registered Persons and their service providers must assess whether they are exposed to any higher-risk products, services, jurisdictions or scenarios identified in the SIBL-EP Risk Assessment and, if so, implement procedures to manage or mitigate those risks.
• Entities previously registered as SIBL Excluded Persons wishing to continue providing services were required to submit application forms to re-register with the Authority as Registered Persons.
• Registered Persons are subject to authorisation and AML/CFT supervisory engagement, including onsite inspections, reporting requirements, and fitness and propriety tests for beneficial owners, shareholders and directors.
• Licensees/registrants must consider strengthening their AML/CFT systems, controls, policies and procedures based on the risks identified in the report.

Applies to

SIBL Excluded Persons (former category), Registered Persons under SIBL, service providers to Registered Persons, licensees/registrants conducting securities investment business

Deadlines

• January 15, 2020: SIBL Excluded Persons ceased to exist as a category under SIBL; entities wishing to continue operating were required to apply to re-register with CIMA as Registered Persons.