The Cayman's Department of Commerce & Investment is introducing new board policies that will affect money-lending businesses as part of its new anti-money laundering regulation that comes into force on May 1.
The department oversees designated non-financial businesses and professions, which include real estate agents and precious metal dealers.
The policy changes affect money-lending businesses such as payday loan providers, who must now submit proof of their source of funds when making an application for a business licence.
The applications of money-lending, real estate and precious metals businesses will be subject to simplified due diligence by the DCI Compliance and Enforcement Unit before the DCI board reviews them.
The licensing period for developers making applications under the Local Companies Control Law is reduced to five years. Developers seeking a longer licensing period will be required to resubmit new applications, including updated information about the status of the project.
The jurisdiction has amended its AML regulations after the Caribbean Financial Action Task Force (CFATF) fourth round mutual evaluation found that Cayman's national risk assessment, conducted in 2015, was insufficient as it failed to accurately assess the real global risks the jurisdiction faces.
It also found that Cayman authorities have failed to prosecute any severe money laundering cases, focusing too much on "domestic minor predicate offences" and failing to address the real risks the jurisdiction faces from international financial crime.
The report said that "larger and complex financial investigations and prosecutions have not been identified or pursued, and there is limited focus on stand-alone ML cases and foreign generated predicate offences." It found that "there remains fundamental challenges in how the jurisdiction identifies instances of ML/TF for investigation."
The report said Cayman was reactive, not proactive, in its investigations of financial crime, and even then it has reacted only to local crimes, with no significant prosecutions of money laundering or terrorist finance cases in the jurisdiction. The evaluation said the financial reporting authority is under-resourced and it has not been provided with the tools to assist investigative authorities in the identification of suspicious activity reports (SARs).
CFATF also highlighted that developers who are selling their expensive properties directly to customers are not subject to any oversight, which leaves them vulnerable to money laundering and terrorist financing.
