Targeted Financial Sanctions - Russia and Belarus (2022-03-16)

Summary

This is a general industry notice issued by the Cayman Islands Monetary Authority on 16 March 2022, alerting financial service providers (FSPs) and virtual asset service providers (VASPs) to the United Kingdom's updated sanctions regime against Russia and Belarus following Russia's invasion of Ukraine on 24 February 2022. The notice does not create new sanctions law but reminds regulated entities of their existing legal obligations under Cayman Islands targeted financial sanctions requirements, which incorporate UK sanctions designations as applied locally by the Governor.

Core Compliance Duties

• Monitoring: Monitor applicable sanctions lists, including local Governor designations and the UK's consolidated list.
• Screening: Screen clients against designated persons/entities lists.
• Freezing: Freeze assets belonging to designated persons.
• Dealing restrictions: Refrain from dealing with such assets absent a Governor's licence.
• Reporting: Report suspected designated persons or offences to the Governor via the Financial Reporting Authority (FRA).

The notice also flags the extraterritorial reach of other sanctions regimes, particularly US OFAC sanctions, which may apply to Cayman entities dealing in USD or with US ownership links.

Additional Recommendations

• Keep sanctions compliance programmes fit-for-purpose.
• Document internal investigations into suspected breaches.
• Provide updated training to staff.
• Have governing bodies monitor emerging cybersecurity threats linked to the Russia-Ukraine situation.

These additional expectations are expressed in softer, aspirational language rather than as strict legal obligations. The notice warns that breaches of financial sanctions are a serious criminal offence in the Cayman Islands carrying significant penalties.

Key obligations

• Regularly monitor sanctions applicable to the Cayman Islands, including local designations made by the Governor
• Review clients against the UK's lists of designated persons/entities and the consolidated sanctions list
• Freeze any accounts, funds or economic resources belonging to, owned, held or controlled by designated persons or entities
• Refrain from dealing with funds or assets or making them available to designated persons or entities unless licensed by the Governor
• Report to the Governor, through the Financial Reporting Authority, as soon as practicable, if they know or have reasonable cause to suspect a person is a designated person or an offence has been committed under sanctions legislation
• Disclose to the Governor, through the FRA via the Compliance Reporting Form, details of any frozen funds/assets or actions taken in compliance with sanctions prohibitions, including attempted transactions
• Ensure sanctions compliance programmes remain fit-for-purpose and can respond quickly to changes in sanctions regimes
• Formally document and securely retain records of internal investigations into suspected sanctions breaches or evasion
• Provide appropriate training and guidance to compliance and front-line staff on sanctions measures and handling affected clients/transactions

Applies to

financial service providers (FSPs), virtual asset service providers (VASPs)