A number of international financial sanctions are applied against countries, regimes or persons designated to be in violation of international laws. They are imposed with the intent of 1) changing the conduct of listed countries, regimes or persons; 2) imposing punitive measures when international peace and security are threatened and diplomatic efforts have failed; and/or 3) deterring, preventing or suppressing terrorist acts. Two key international bodies that adopt international sanctions measures are the United Nations (UN) and the European Union (EU). From time-to-time, the UK Government passes Orders (“Orders”) in Council implementing UN or EU sanctions and extending such sanctions to its Overseas Territories. When extended to Overseas Territories, these Orders have the force of law in the Cayman Islands, as a British Overseas territory, and breaches may constitute an offence for which fines and/or criminal convictions may result. The Orders that are in force in the Cayman Islands can be found in the Cayman Islands Gazette.
Pursuant to the Proliferation Financing (Prohibition) Law, the Cayman Islands Monetary Authority may give a direction to a person or class of persons within the financial services sector in relation to terrorist financing, money laundering or the development of weapons of mass destruction. Via these directions the Authority has the power to impose requirements relating to customer due diligence measures, ongoing monitoring practices, systematic reporting and cessation of business. Failure to comply with a direction constitutes an offence. The United Nations has passed two resolutions relating to anti-proliferation, one related to North Korea and the other to Iran. These resolutions are in force in the Cayman Islands via orders passed in the United Kingdom, namely The Iran (Restrictive Measures) (Overseas Territories) Order 2012 and the North Korea (United Nations Measures) (Overseas Territories) Order 2006.
Financial Services Providers are expected, pursuant to the Money Laundering Regulations, to have systems and controls in place to conduct initial due diligence, for monitoring on an ongoing basis and reporting. In the event of updates to the relevant sanctions lists, Financial Services Providers may discover that certain sanctions are applicable to one or more of their clients, existing or new. Pursuant to the Proceeds of Crime Law, the Money Laundering Regulations and the Terrorism Law, Financial Services Providers must file a Suspicious Activity Report to the Financial Reporting Authority if they discover a relationship that contravenes a sanctions order or a direction under the Proliferation Financing (Prohibition) Law.
The Financial Reporting Authority has issued Guidance on Targeted Financial Sanctions for the public that FSPs might find useful.
A list of orders in force in the Cayman Islands can be found here: Sanction Orders Please note that the Authority does not guarantee that this list is accurate, complete and up to date. It is the responsibility of every Financial Services Provider to keep itself updated and to comply with the sanctions in force in the Cayman Islands. Official sanctions orders applicable in the Cayman Islands are published in the Cayman Islands Gazette.
The respective order should be consulted to determine if a licence is available allowing for activities that would otherwise be prohibited under the order.
An application can be made under the relevant article of the respective order for a licence allowing for the desired activity that would otherwise be prohibited under the order.
Application to be made in writing to the Financial Secretary of the Cayman Islands.