Cayman Fund Compliance - AML Deadline

GRAND CAYMAN, Cayman Islands - July 27, 2018 - PRLog -- On 6 April 2018, CIMA published a notice which confirmed that natural persons need to be appointed to the following three AML officer roles: money laundering reporting officer (MLRO), deputy money laundering reporting officer (DMLRO) and AML compliance officer (AMLCO and together, AML Officers). This requirement applies to all Cayman entities conducting "relevant financial business" which impacts hedge funds (registered or unregistered with CIMA), private equity funds, investment management companies and special purpose vehicles. In practice it seems likely some funds will appoint one individual to the dual roles of AMLCO and MLRO and a separate individual as DMLRO.

CIMA's notice introduced a grace period with respect to such AML Officer appointments such that with respect to funds in existence prior to 1 June 2018, the appointments must be made by 30 September 2018. New funds are now expected to have appointed such designated AML Officers. In the case of CIMA regulated funds, notification of the designated AML Officers must be made to CIMA by the applicable deadline. With respect to private equity funds and other unregulated funds, whilst AML Officers must be appointed by the deadline, there is currently no stipulated notification procedure for such vehicles.

Significant changes include the introduction of the following additional requirements:

• Conducting employee screening procedures when hiring employees;
• Conducting checks against all applicable sanctions lists and lists of countries which are regarded as non-compliant with the FATF recommendations;
• Conducting enhanced due diligence on politically exposed persons; and
• Adopting a risk-based approach in AML/CFT procedures appropriate for the fund's organisation, structure and business activities.

In relation to the risk-based approach for AML/CFT procedures, it will involve identifying AML/CFT risks to the fund and assessing such risks in relation to the fund's investors and the countries/geographic areas in which the investors reside. This requires funds to classify all investors as high, medium or low risk. A fund will also need to carry out and document a risk assessment of its activities and investments. The methodology for such assessment should be documented in a compliance manual.

About Bell Rock Group
Bell Rock is a leading provider of independent fund directors and fund solutions, based in the Cayman Islands. Our team of professionals act on the board of hedge funds, private equity funds, real estate funds, funds of funds with clients globally. We provide a range of additional services including compliance services that include experienced individuals to perform the roles required under the new law and regulations. For further information, please feel free to contact us or view our website by clicking here.