Cayman Islands Releases FATF Response; All FATF Anti-money Laundering Criteria Met.

Business Editors

GRAND CAYMAN, Cayman Islands--(BUSINESS WIRE)--Oct. 3, 2000

The Government of the Cayman Islands today released details of its report to the Financial Action Task Force (FATF) on Money Laundering.

The FATF will be meeting in Madrid from October 4 - 6, and last week announced its intention to conduct a preliminary review of corrective measures of "non-cooperative" jurisdictions announced in June.

Based on its June 2000 review, FATF stated that the primary "deficiencies" of the Cayman Islands anti-money laundering regime involved customer identification, internal reporting and record keeping. All of these areas, in addition to related issues, have been addressed since that time. Legislative action has been taken to ensure that many of the guidelines, which existed previously as guidelines within a "Code of Practice," have since become legal requirements.

"We have worked diligently over the past few months to ensure that the regulations and laws of this jurisdiction meet or exceed both the 40 FATF recommendations and the 25 criteria adopted by the FATF in February 2000," said George McCarthy, Financial Secretary of the Cayman Islands. "We are in full compliance with these standards, and it was our hope that the FATF would report publicly on its review, and then take prompt actions to remove us from the list of `non-cooperative' jurisdictions. We look forward to hearing about the `de-listing' procedure and timetable from FATF."

The Cayman Islands began passing laws relating to money laundering and other financial crimes in 1984, and has continually amended them to keep pace with international standards. In addition, a Code of Practice with comprehensive guidelines for the financial services industry was published in March 2000.

"We have been recognized by the U.S. and other countries as leaders in the Caribbean region for our anti-money laundering efforts, and the legislation passed in July and September reflects our continuing commitment to the fight against money laundering," added McCarthy.

The main areas of concern raised by the FATF, and legislative actions taken by the Cayman Islands, are outlined below with details of actions undertaken to address them:

-- Customer Identification & Record-keeping Rules: The Cayman Islands has
compulsory legal requirements, with respect to relevant financial business, for
customer identification, internal reporting and record-keeping in the Money
Laundering Regulations 2000, which contain criminal sanctions. These
regulations were passed on August 7, 2000 and took effect on September 1, 2000.


-- Regulatory Cooperation: The Cayman Islands Monetary Authority has been
enabled by the Monetary Authority (Amendment) (International Co-operation) Law
2000 to readily access and share information with overseas regulators,
including information regarding the identity of customers in appropriate
regulatory circumstances. This law was passed on July 14, 2000, and took effect
on July 24, 2000.

-- The Role of the Regulatory Authorities: The Cayman Islands Monetary
Authority has reviewed its resources and has adopted a strategy for enhanced
on-site inspections of licensees within a finite period.

-- Suspicious Activity Reporting: A new criminal offence was added on July 14,
2000 by the Proceeds of Criminal Conduct Law (Amendment) (Money Laundering
Regulations) Law 2000, making it a crime punishable by up to two years
imprisonment to fail in the course of business to report any suspicious
transaction. This exceeds UK Law, which has such an offence only in relation to
drugs and terrorism. In addition, the Money Laundering Regulations require by
law that financial services providers have systems in place to secure the
reporting of suspicious transactions, punishable on a breach by up to two years
imprisonment.

-- Companies Management: All classes of management companies are subject to
Money Laundering Regulations 2000, and are therefore part of the anti-money
laundering regime. The Money Laundering Regulations adopted in the Cayman
Islands are identical to those of the UK, but their scope is wider due to the
broader definition of relevant financial business.

-- Additional Points: In addition, on September 18, 2000, the Legislative
Assembly passed legislation regulating money transmitters, and transferring the
regulation of building societies and credit unions from the Registrar of
Companies to the Cayman Islands Monetary Authority.

"As one of the major international financial centers, we take our anti-money laundering regime very seriously," said McCarthy. "There is no reason to penalize the Cayman Islands by keeping us on a list of `non-cooperative' countries when our recognized track record on anti-money laundering efforts, as well as the recent legislative actions, do not warrant this continued classification."

NOTES TO EDITORS:

The Cayman Islands, a United Kingdom Overseas Territory, is one of the ten largest financial centres. Forty-three of the world's top 50 banks have licensed subsidiaries or branches here. The financial services sector includes banking, mutual funds, insurance, company management, vessel registration, structured finance and the Cayman Islands Stock Exchange.

Laws of the Cayman Islands related to financial services regulation:

Monetary Authority Law (2000 Revision)

Proceeds of Criminal Conduct Law (2000 Revision)

Money Laundering Regulations 2000

Companies Management Law (2000 Revision)

Banks and Trust Companies Law (2000 Revision)

In June 2000, the Cayman Islands made an "advance commitment"

to the Organisation for Economic Cooperation and Development

(OECD), and the jurisdiction did not appear on the OECD's

list of `harmful tax havens,' published on June 26, 2000.

The FATF's summary report of June 22, 2000, included a

positive report on the history of the Cayman Islands,

stating, " it has been a leader in developing anti-money

laundering programs throughout the Caribbean region. It has

served as president of the CFATF, and it has provided

substantial assistance to neighboring states in the region.

It has demonstrated exemplary cooperation on law enforcement

matters, and uncovered several serious cases of fraud and

money laundering otherwise unknown to authorities in FATF

member states. In addition, it has closed several financial

institutions on the basis of concerns about money

laundering."