Regulatory Policy on Licensing Banks (Revised August 2014)

Summary

This is CIMA's Regulatory Policy on Licensing Banks (revised August 2014), which sets out the criteria and process the Cayman Islands Monetary Authority applies when assessing applications for a banking licence under Section 6 of the Banks and Trust Companies Law (BTCL). It applies to any person or entity seeking to carry on banking business in or from within the Cayman Islands.

Licence Categories

'A' licences: Cover banking business within and outside the Islands.
'B' licences: Generally prohibited from dealing with Cayman residents.
Restricted 'B' licences: Limited customer base, generally capped at 20 related-party customers.
Home regulated banks: Not subject to consolidated supervision elsewhere, and are supervised by CIMA on a consolidated basis.
Host regulated banks: Subsidiaries or branches of foreign banking groups already subject to consolidated supervision by a home regulator.

Assessment Criteria

The document describes the assessment criteria CIMA applies across both categories, covering fitness and propriety of directors and senior management, ownership and control transparency, financial resources, track record and business plan, internal systems, controls and risk management (including AML/CFT), know-your-customer policies, and record keeping.

Minimum expectations: Include director banking experience, corporate governance, disclosure of significant shareholders, ICAAP development, and having an ordinarily-resident MLRO and Compliance Officer at management level whose functions cannot be outsourced.
Host regulated banks: CIMA requires written confirmations from the home regulator regarding no objection to establishment, inclusion in consolidated supervision, absence of regulatory concerns, examination frequency, and information-sharing arrangements.

Overall, the policy functions as a licensing framework and guidance document rather than a standalone set of ongoing statutory obligations. It tells prospective applicants and their advisers what CIMA expects to see in a licence application and how applications will be evaluated, rather than imposing new continuing compliance duties on already-licensed banks beyond what the BTCL and related regulations already require.

Key obligations

Persons seeking to conduct banking business in or from within the Cayman Islands must apply in writing to CIMA for a licence under Section 6 of the BTCL.
Applications must be accompanied by the documents and information set out in the Schedule of the Regulations, any other documents CIMA requires, and the prescribed fee.
Applicants must demonstrate that directors and senior management are fit and proper, with at least two directors having sound banking experience (generally minimum five years at senior level).
Applicants must provide a corporate chart showing all entities under common ownership or management, including non-financial entities.
Applicants must disclose shareholders holding 10% or more of shares/voting power, or, absent such holders, the 10 largest shareholders.
Where held by a trust, applicants must provide the trust deed and disclose trustees, settlor, protector and beneficiaries.
Applicants with two or fewer shareholders must provide a succession plan covering death, critical illness or incapacity of shareholder(s).
Significant management decisions must be made under a 'four eyes' principle by more than one appropriately qualified person.
Restricted 'B' licensees must generally limit their customer base to related parties and not exceed 20 customers.
Home regulated bank applicants must effectively develop an Internal Capital Adequacy Assessment Process (ICAAP).
Host regulated bank applications must include written confirmation from the home regulator on matters including no objection to establishment, inclusion in consolidated supervision, absence of regulatory concerns, examination frequency/scope, and information-sharing arrangements.
Applicants must appoint a suitably qualified MLRO and Compliance Officer who are ordinarily resident in the Cayman Islands, at management level, and whose functions may not be outsourced.
Applicants must demonstrate adequate policies, procedures and systems for AML/CFT and KYC consistent with the Proceeds of Crime Law, Money Laundering Regulations and related Guidance Notes.
Applicants must maintain records in a manner ensuring CIMA has reasonable access at all reasonable times, and address CIMA's requirements on on-Island record retention.

Applies to

banks, applicants for a banking licence, Category A banking licensees, Category B banking licensees, restricted B banking licensees, home regulated banks, host regulated banks (subsidiaries and branches)

Deadlines

5 weeks: Typical CIMA processing timeframe for Category 'A' banking licence applications, beginning once all required documents/information are received.
4 weeks: Typical CIMA processing timeframe for Category 'B' banking licence applications, beginning once all required documents/information are received.