Instruction Number 01/2021 for Specified Businesses - Cayman Islands (2021-03-05)

Summary

This is a binding Instruction issued by the Guernsey Financial Services Commission under Section 49AA(6) of the Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law, 1999, prompted by the FATF placing the Cayman Islands on its increased monitoring list and the Cayman Islands being removed from Appendix C (Equivalent Jurisdictions) of the Handbook for Countering Financial Crime and Terrorist Financing. It requires specified businesses to reassess reliance on Cayman Islands connected introducers, intermediaries and Appendix C business concessions, and to apply full customer due diligence where those concessions were previously used.

• Identify affected relationships: By 30 September 2021, identify all business relationships relying on Cayman Islands introducers, intermediaries or Appendix C business treatment under paragraphs 6 or 10 of Schedule 3 and Handbook chapters nine and ten.
• Reliable introductions: For relationships relying on a reliable introducer, ensure full customer due diligence measures under paragraph 4 of Schedule 3 and the Handbook are met.
• Appendix C businesses: For customers treated as Appendix C businesses, ensure verification measures under paragraph 4 of Schedule 3 and associated Handbook rules are met.
• Intermediary relationships: Either meet correspondent relationship requirements (paragraph 5(1)(b) of the Schedule and Handbook section 8.6) or apply full due diligence on each of the intermediary's customers (paragraph 4 of the Schedule).
• Relationship risk assessment review: By 30 September 2021, review relationship risk assessments for all business relationships where the Cayman Islands is a relevant risk factor and apply mitigating measures if risk has increased.
• Notification of non remediation: If a business relationship cannot be remediated by 30 September 2021 under points 2, 3 or 4, notify the Commission detailing additional risk controls applied.
• Inability to complete CDD: Where customer due diligence ultimately cannot be completed, terminate the business relationship and consider making a disclosure to the Financial Intelligence Service.

The Commission states it will review compliance with this Instruction through on-site inspections and other supervisory means, indicating this is an active, monitored obligation rather than guidance only.

Key obligations

• By 30 September 2021, identify all existing business relationships where reliance was placed on a Cayman Islands introducer, intermediary or Appendix C business under paragraphs 6 or 10 of Schedule 3.
• For relationships relying on a reliable introducer, apply full customer due diligence measures under paragraph 4 of Schedule 3 by 30 September 2021.
• For Appendix C business customers, apply verification measures under paragraph 4 of Schedule 3 and the Handbook by 30 September 2021.
• For intermediary relationships, either meet correspondent relationship requirements under paragraph 5(1)(b) of the Schedule or apply full due diligence on each underlying customer of the intermediary.
• Review relationship risk assessments by 30 September 2021 for all business relationships where the Cayman Islands is a relevant risk factor and apply mitigating measures where risk has changed.
• Notify the Commission if unable to remediate an identified business relationship by 30 September 2021, detailing additional risk controls put in place.
• Where customer due diligence cannot ultimately be completed, terminate the business relationship and consider making a disclosure to the Financial Intelligence Service.

Applies to

specified businesses

Deadlines

• 30 September 2021: Deadline to identify affected Cayman Islands related business relationships, remediate them through full customer due diligence (reliable introducer, Appendix C, or intermediary measures), review relationship risk assessments, and notify the Commission of any relationships that cannot be remediated.