Financial Sanctions Overview
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:
From time-to-time, the UK Government passes 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. UNSCRs in relation to terrorist and proliferation financing are also implemented pursuant to the Terrorism Act and the Proliferation Financing (Prohibition) Act.
Anti-Proliferation Financing Orders
Pursuant to the Proliferation Financing (Prohibition) Act, the Financial Reporting 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, also called “proliferation activities”. Via these directions the Financial Reporting Authority has the power to impose requirements relating to enhanced customer due diligence measures, enhanced ongoing monitoring practices, systematic reporting and cessation of business. Failure to comply with a direction constitutes an offence and may be subject to penalties under the Proliferation Financing (Prohibition) Act.
Responsibility of Financial Service Providers
Financial service providers (FSPs) are expected, pursuant to the Anti-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, FSPs may discover that certain sanctions are applicable to one or more of their clients, existing or new. Pursuant to the Terrorism Act and the Proliferation Financing (Prohibition) Act, FSPs have certain reporting obligations to the Financial Reporting Authority, as well as certain freezing obligations, if they discover a relationship that contravenes an Order or a direction in accordance with such legislation.
See Guidance on Targeted Financial Sanctions issued by the Financial Reporting Authority which contains information on sanctions reporting obligations.
List of Sanctions applicable in the Cayman Islands
A list of Orders in force in the Cayman Islands can be found here.
Please note that CIMA does not guarantee that this list is accurate, complete and up to date. It is the responsibility of every financial service 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.
Obtaining a licence under restrictive measures or UN Sanctions (Overseas Territories) Orders
The respective Order should be consulted to determine if a licence is available allowing for activities that would otherwise be prohibited.
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.
An application for a licence is to be made in writing to the Financial Reporting Authority. A copy of the licence application form can be found in the Guidance on Targeted Financial Sanctions issued by the Financial Reporting Authority.
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