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The Criminalization of Terrorist Financing in the Cayman Islands

The two principal enactments in relation to the criminalization of terrorist financing in the Cayman Islands are the Terrorism (United Nations Measures) (Overseas Territories) Order, 2001 and the Terrorism Act.

Terrorism (United Nations Measures) (Overseas Territories) Order

The Terrorism (United Nations Measures) (Overseas Territories) Order, 2001 is a UK Order in council made pursuant to United Nations Security Council Resolution 1373 and extended by the UK to all of its overseas territories.

Article 3 criminalizes the act of soliciting, receiving or providing funds with knowledge or intent that will or may be used for the purposes of terrorism.

Article 4 further extends criminal liability to making any funds or financial services available directly or indirectly for the benefit of persons committing, attempting to commit,  facilitating or participating in an act of terrorism.  Article 2 defines 'funds' consistent with the definition in the UN Convention on the Suppression of Financing of Terrorism.

Terrorism Act

The Terrorism Act is a domestic legislation criminalizing terrorism and terrorist financing, the latter in accordance with the UN Convention on the Suppression of Financing of Terrorism. In accordance to the law, it is an offence:

  • to solicit, receive or provide property intending that it be used, or having reasonable cause to suspect that it may be used, for the purposes of terrorism. Section 2 defines property as including money and all other property, real or personal, including things in action and other intangible property. Section 18 defines 'terrorist property' as property which is 'likely to be used' for the purposes of terrorism and proceeds from the commission of acts of terrorism.  
  • for a person to use property for the purposes of terrorism or to possess property intending that it be used, or having reasonable cause to suspect that it may be used, for the purposes of terrorism. 
  • for a person to enter into or become concerned with an arrangement as a result of which property is made available to another knowing or having reasonable cause to suspect that it will or may be used for the purposes of terrorism. 
  • to enter into or become concerned with an arrangement which facilities the retention or control by or on behalf of another person of terrorist property by concealment, by removal from the jurisdiction or by transfer to nominees.

Section 200 of the Proceeds of Crime Act notes an amendment to the Terrorism Act by stating that a person commits an offence if:

  • he uses property for the purpose of terrorism;
  • he possesses property and intends that it should be used, or has reasonable cause to suspect that it may be used for the purpose of terrorism;
  • he possesses or acquires property which he knows or has reasonable cause to suspect has been used, directly or indirectly, in the commission of an act of terrorism; or             
  • acquires property as a result of or in connection with acts of terrorism.
Sanctions to Combat Terrorist Financing 

From time to time, Financial Services Providers operating in the Cayman Islands will be required to comply with various orders that impose financial sanctions in an effort to combat terrorist financing. The Cayman Islands Monetary Authority publishes these orders on its Sanctions webpage for informational purposes. Please note that the Authority does not guarantee that the list of sanctions published by the Authority on its website is accurate, complete and up to date. As such, it is the responsibility of every Financial Services Provider to inform itself of and to comply with the sanctions applicable to Financial Services Providers in the Cayman Islands.  Official sanctions orders applicable in the Cayman Islands are published in the Cayman Islands Gazette. For more information, please visit the Sanctions page on this website.

The Criminalization of Proliferation Financing

Proliferation Financing refers to the act of providing funds or financial services which are used, in whole or in part, for the manufacture, acquisition, possession, development, export, trans-shipment, brokering, transport, transfer, stockpiling or use of nuclear, chemical, or biological weapons and their means of delivery and related materials (including both technologies and dual use goods used for illegitimate purposes), in contravention of national laws or, where applicable, international obligations. The Proliferation Financing (Prohibition) Act, empowers the Cayman Islands Monetary Authority to take action against persons engaged in activities that may have some connection with terrorist financing, money laundering or the development of weapons of mass destruction. Orders issued under the Proliferation Financing (Prohibition) Act are published in the Cayman Islands Gazette. The United Nations has passed two resolutions relating to anti-proliferation, one related to North Korea and the other related to Iran. These resolutions are in force in the Cayman Islands via orders passed in the UK, namely the Iran (Restrictive Measures) (Overseas Territories) Order 2012 and the North Korea (United Nations Measures) (Overseas Territories) Order 2006. For more information, see UN and UK Sanctions.

Obtaining a licence or authorization under the Proliferation Financing (Prohibition) Act 
  • A relevant person may apply in writing for a licence allowing for an exemption from the requirements of a direction that restricts or ceases business. 
  • The applicant shall provide such information and documents as may be required in determining the application (to be determined on a case by case basis).