AML/CFT

Who is caught

The Cayman Islands AML/CFT framework rests on the Proceeds of Crime Act (2025 Revision) as the principal statute, supported by the Anti-Money Laundering Regulations (2025 Revision) as the operational rulebook and by CIMA's Guidance Notes. Layered on top are the Terrorism Law, the Proliferation Financing (Prohibition) Law, applied UK sanctions measures, the beneficial ownership regime, and the sector-specific regulatory laws administered by CIMA. Who is caught depends primarily on whether a person conducts 'relevant financial business' or falls within one of these adjacent regimes.

Relevant financial business

The Proceeds of Crime Act applies to any person or entity conducting relevant financial business in or from the Cayman Islands, as listed in Schedule 1 to that Act.

• Listed activities: Schedule 1 expressly includes virtual asset service providers, securities investment business, dealers in precious metals or precious stones for cash transactions of US$10,000 or more, providers of registered office services to private trust companies, real estate and listing agents and CSX broker members, and persons investing, administering or managing funds on behalf of others.
• Financial service providers: The AML Regulations apply to financial service providers generally, including banks, correspondent banks, life insurance and related insurers, and payment service providers.
• DNFBPs: Part 12A of the AML Regulations extends the regime to designated non-financial businesses and professions operating in or from the Cayman Islands.

Adjacent regimes

• Virtual asset service providers: The Virtual Asset (Service Providers) Act and its amendment and regulations govern legal entities carrying on virtual asset services (exchange, transfer, custody, and issuance-related services) as a business from the Islands; natural persons are prohibited from carrying on such business.
• Beneficial ownership: The Beneficial Ownership Transparency Act and Regulations apply to in-scope Cayman legal persons (companies, LLCs, LLPs, limited partnerships, exempted limited partnerships and foundation companies) and to the corporate services providers that support them.
• Financial sector persons: The Proliferation Financing (Prohibition) Law applies to persons operating in the financial sector (banks and trust companies, building societies, company managers, cooperative societies, insurers, money services businesses, mutual funds, securities investment business, and licensed directors), plus any person named in an FRA direction, and imposes a standalone freezing duty on anyone holding funds of a UN-designated person.
• Terrorism and sanctions: The Terrorism Law applies to any person but imposes specific disclosure duties on the regulated sector, and the Ukraine (Sanctions) (Overseas Territories) Order applies to any person in the Cayman Islands and to relevant deposit-taking institutions.

Sources: Anti-Money Laundering Regulations (2025 Revision) · Beneficial Ownership Transparency Act (2026 Revision) · Proceeds of Crime Act (2025 Revision) · Proliferation Financing (Prohibition) Law (2017 Revision) · Terrorism Law (2018 Revision) · Virtual Asset (Service Providers) Act (2024 Revision) · The Ukraine (Sanctions) (Overseas Territories) Order 2014 (SI 2014 No. 497)

Key duties

The continuing obligations fall into an AML compliance programme common to all relevant financial businesses, a customer due diligence and reporting cycle, licensing and registration gateways, and record-keeping and notification duties. The duties below with fixed deadlines should be prioritised.

AML compliance programme

• Programme and officers: Under the AML Regulations, businesses must establish and maintain a compliance programme with systems and training, and appoint an Anti-Money Laundering Compliance Officer and a Money Laundering Reporting Officer with defined duties.
• Fund officers: CIMA guidance confirms every Cayman-domiciled fund conducting relevant financial business (regulated or unregulated) must designate a natural person at managerial level as AMLCO, MLRO and DMLRO, with the MLRO and DMLRO being different individuals.
• Risk assessment: Businesses must conduct and document risk assessments of customers, products, delivery mechanisms, new technologies and geographic areas, applying a risk-based approach.

Due diligence and reporting

• Customer due diligence: Perform standard, simplified or enhanced due diligence as applicable before or during establishment of business relationships, including for life insurance beneficiaries and politically exposed persons.
• Suspicious activity reports: File suspicious activity reports when required, using the prescribed Suspicious Activity Report form submitted to the Financial Reporting Authority; SARs relating to Cayman funds must always be filed with the FRA.
• Wire and virtual asset transfers: Comply with identification and record-keeping rules for wire transfers (Part 10) and transfers of virtual assets (Part 10A); VASPs must collect and maintain originator and beneficiary information and provide records to CIMA or a competent authority within forty-eight hours of a request.
• Record-keeping: Maintain identification, transaction and due diligence records; CIMA's records guidance and rules set a minimum five-year retention period after each related transaction and require records to be accessible to CIMA (generally within one to three business days).

Licensing and registration

• Money services: A person must hold a CIMA licence before carrying on money services business, maintain a Cayman principal office and minimum net worth, comply with section 8A AML procedures, and submit quarterly returns within 30 calendar days of the reporting date.
• Virtual assets: A person must be registered, licensed or granted a waiver before carrying on virtual asset service; approved applicants must pay the registration or licence fee within thirty days of notification or the approval lapses, and a registered person requiring a licence at commencement of the 2024 amendment must apply within ninety days.
• Securities investment business: Applicants must submit prescribed particulars and fees; registered persons must register and pay the prescribed fees to CIMA.
• DNFBP registration: DNFBPs must register with their designated Supervisory Authority, allow site visits, notify it as required, and respond to information requests.

Beneficial ownership and notification

• Register maintenance: Legal persons must identify beneficial owners using the 25% ownership or control threshold, provide required particulars to their corporate services provider, and maintain a current beneficial ownership register; corporate services providers must deposit information with the competent authority at least monthly (with longer cycles for liquidation and ordinary resident companies).
• Updates: Where beneficial ownership information ceases to be current, the legal person must provide amended particulars in writing within thirty days (one month under the Companies Regulations) of becoming aware; a 'pending' or 'enquiries pending' status lasting three or more months creates a presumption of breach.
• Changes in control and fitness: CIMA's prior approval is generally required before transferring or issuing FSP shares, and material changes affecting the probity questions in a Personal Questionnaire must be reported within 21 days; VASP registered persons and licensees must disclose changes to application information within 15 days.
• Sanctions and proliferation freezing: Any person holding funds or economic resources of a UN-designated person must immediately freeze them and disclose to the FRA as soon as reasonably practicable; relevant institutions under the Ukraine sanctions Order must inform the Governor where they know or suspect a customer is a designated person.

Sources: Anti-Money Laundering Regulations (2025 Revision) · Beneficial Ownership (Companies) Regulations (2022 Revision) · Beneficial Ownership Transparency Act (2026 Revision) · Beneficial Ownership Transparency Regulations (2026 Revision) · Money Services Act (2024 Revision) · Proceeds of Crime Act (2025 Revision) · Proceeds of Crime (Disclosure) Order, 2010 · Proliferation Financing (Prohibition) Law (2017 Revision) · Virtual Asset (Service Providers) (Amendment) Act, 2024 (Act 22 of 2024) · Virtual Asset (Service Providers) Act (2024 Revision) · Guidance Notes for the Completion of the Money Services Business Survey/Money Services Business Quarterly Return Form (March 2011) · AML FAQs for Funds (2019-02-01) · The Ukraine (Sanctions) (Overseas Territories) Order 2014 (SI 2014 No. 497) · Regulatory Policy - Fitness and Propriety (December 2020) · Regulatory Policy - Criteria for Approving Changes in Ownership and Control · Statement of Guidance - Nature, Accessibility and Retention of Records (April 2023) · Rule and Statement of Guidance - Nature, Accessibility, and Retention of Records for Licensees Conducting the Business of Company Management

Exemptions and carve-outs

The instruments provide a mix of activity carve-outs, waivers, and reduced-diligence options rather than blanket exemptions from the AML/CFT regime.

• Money services carve-outs: The Money Services Act does not apply to certain licensed banks and trust companies, building societies, or cooperative societies unless they act as agents or franchise holders of a money services business, and licensed money services businesses are exempt from needing a separate Trade and Business Licensing Act licence.
• VASP waivers: A person already licensed under another Cayman regulatory law may, as an existing licensee, obtain a waiver from CIMA rather than a separate VASP licence.
• Simplified due diligence: The AML Regulations permit simplified customer due diligence where the risk profile allows, as an alternative to standard or enhanced measures.
• Fund officer exemption: CIMA guidance states that funds in LUT/LUL status are exempt from the requirement to appoint an AMLCO, MLRO and DMLRO, though funds still winding up without formal de-registration remain obligated.
• Beneficial ownership exemptions: The beneficial ownership regime provides for exemptions confirmed and updated with the competent authority; exemption confirmations must include specified details and be transmitted via the search platform, and amended if they cease to be true.
• Ownership-change listing exemption: FSPs whose shares are listed on an approved stock exchange may be exempt from prior approval of ownership changes, but must notify CIMA when relying on the exemption, and approval is still required where the exemption does not cover a resulting change of control.
• Sanctions licensing: The Ukraine sanctions Order allows limited exceptions (such as crediting a frozen account with pre-existing interest or contractual payments) and a licensing regime under which the Governor may authorise otherwise-prohibited activity.
• Legitimate interest access: Public access to beneficial ownership information cannot be granted where a prohibition on disclosure has been granted under the related Access Restriction Regulations.

Sources: Anti-Money Laundering Regulations (2025 Revision) · Beneficial Ownership (Companies) Regulations (2022 Revision) · Beneficial Ownership Transparency (Legitimate Interest Access) Regulations, 2024 (SL 47 of 2024) · Money Services Act (2024 Revision) · Virtual Asset (Service Providers) Act (2024 Revision) · AML FAQs for Funds (2019-02-01) · The Ukraine (Sanctions) (Overseas Territories) Order 2014 (SI 2014 No. 497) · Regulatory Policy - Criteria for Approving Changes in Ownership and Control

Enforcement and penalties

Enforcement runs through CIMA's administrative fines regime, restrictions notices in the beneficial ownership context, and a range of criminal offences and asset-recovery powers across the AML/CFT statutes.

Administrative fines

• Fine tiers: Under the Monetary Authority Act as amended, breaches of the Act, a regulatory law or the Anti-Money Laundering Regulations are categorised as minor, serious or very serious. Stated caps include, for a serious breach, up to $50,000 for an individual and up to $100,000 for a body corporate, partnership, LLP, ELP or unincorporated association; for a very serious breach, up to $100,000 for an individual and up to $1,000,000 for those entity types.
• Personal liability: Directors, managers, secretaries, partners in management or control, and persons managing an unincorporated association can be personally fined or prosecuted where a breach or offence by the entity is committed with their consent or connivance or is attributable to their neglect.
• Fines process: The Monetary Authority (Administrative Fines) Regulations require CIMA to issue a breach notice, allow rectification within thirty days for fixed-fine breaches, consider a reply, and apply prescribed criteria for discretionary fines; a fixed fine may be reviewed by CIMA's Management Committee and a discretionary fine appealed to the Grand Court, and an unpaid fine is a debt to the Crown carrying interest.
• AML and beneficial ownership fines: The AML Regulations contain their own administrative fines framework (Schedule 2 categories, with appeals to the Grand Court), and the beneficial ownership regime allows the Registrar to impose administrative fines by fine notice, with appeal rights to the competent authority.

Restrictions and criminal offences

• Restrictions notices: Under the beneficial ownership regime, a corporate services provider may issue a restrictions notice restraining dealings with a relevant interest where beneficial ownership is not disclosed, subject to a right to apply to the Grand Court.
• Operating without authorisation: Carrying on money services business or virtual asset service without the required licence, registration or waiver is a criminal offence, and the Money Services Act imposes summary-conviction penalties including continuing daily fines.
• False disclosures: Under the Proceeds of Crime (Disclosure) Order, wilfully making or assisting a false or fraudulent statement in a disclosure is a criminal offence carrying escalating fines and/or imprisonment for repeat offences.
• Proliferation and sanctions: The Proliferation Financing (Prohibition) Law provides a civil penalty regime and criminal offences for failing to freeze assets, failing to report frozen funds, failing to comply with a direction, or circumventing one; breach of the Ukraine sanctions prohibitions or reporting duties is a criminal offence carrying significant penalties including imprisonment.
• Terrorism offences: The Terrorism Law criminalises terrorism and terrorist property offences and creates freezing, monitoring and disclosure duties whose breach carries criminal liability.
• Asset recovery: The Proceeds of Crime Act empowers the courts to make confiscation, restraint, receivership and civil recovery orders and to order search, seizure, detention and forfeiture of cash suspected to be proceeds of crime.

Sources: Anti-Money Laundering Regulations (2025 Revision) · Beneficial Ownership Transparency Act (2026 Revision) · Beneficial Ownership Transparency Regulations (2026 Revision) · Monetary Authority (Administrative Fines) Regulations (2025 Revision) · Monetary Authority (Amendment) Act, 2023 (Act 1 of 2023) · Money Services Act (2024 Revision) · Proceeds of Crime Act (2025 Revision) · Proceeds of Crime (Disclosure) Order, 2010 · Proliferation Financing (Prohibition) Law (2017 Revision) · Terrorism Law (2018 Revision) · Virtual Asset (Service Providers) Act (2024 Revision) · The Ukraine (Sanctions) (Overseas Territories) Order 2014 (SI 2014 No. 497)