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Cayman Islands Celebrates EU’s Decision to Remove It from AML/CFT Blacklist

The European Union’s (EU) decision to remove the Cayman Islands from its list of high-risk third countries dealing with anti-money laundering and countering the financing of terrorism (AML/CFT) deficiencies has sparked praise for its potential to significantly broaden investor choices and fuel innovation.

The Cayman Islands will be removed from the EU’s black list on 7 February after it ‘strengthened the effectiveness’ of its AML/CFT regimes and ‘addressed technical deficiencies’, the EU has said.

It follows the assessment by the Financial Action Task Force (FATF) in October 2023 that concluded the Cayman Islands complies with global AML standards.

Cayman Finance, representing the Cayman Islands’ financial services industry, has applauded the EU’s recognition. CEO Steve McIntosh commented: “The Cayman Islands Government and financial services industry share a solid commitment to ensuring that our jurisdiction meets global standards while protecting the rights of investors, asset managers, and other clients.

“The EU’s acknowledgement of the strength of the Cayman Islands’ AML regime is just the most recent example of how we collaborate to translate that commitment into an effective legal and regulatory framework.”

Government response

The Islands Government praised civil servants, regulators as well as industry members for contributing to the milestone.

“The Cayman Islands Government fully understands the significance of this achievement, and what it means for our international reputation,” said the Deputy Premier and Minister for Financial Services, the Hon. André Ebanks.

“My Government colleagues and I are profoundly thankful for the dedication of the many civil servants, regulators and industry members who walked the talk, earning our regime this recognition as a sound place for business. And we reaffirm our commitment with each milestone we achieve.”

“Discussions between the EU and the Cayman Islands – on a range of financial services- related matters, including our delisting – have been incredibly useful in deepening our mutual understanding, and I particularly note the positive, open approach that increasingly characterises our relationship. Being removed from the EU’s AML list paves the way for further dialogue on the policy goals we pursue.”

Enhanced choices for investors

The EU’s decision improves choices for investors by eliminating a requirement that European investors conduct enhanced due diligence of Cayman Islands’ entities. The EU’s action means Article 4 of the EU Securitisation Regulation will no longer prohibit the establishment of securitisation special purposes entities (SSPEs) in the Cayman Islands. Investors will be able to choose to use a SSPE in the Cayman Islands or any other jurisdiction not featuring on the EU AML list.

“Ensuring our legal and regulatory regime meets global standards opens up new opportunities for investors,” MccIntosh also added. “We look forward to using this development to promote the Cayman Islands financial services industry as an innovative leader that offers stability and growth.”

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