The fund must designate as AMLCO a natural person at managerial level with the requisite skills and experience, to manage the compliance programme and report to the board / general partner. The fund must also appoint suitable natural persons at managerial level as MLRO and DMLRO, to whom suspicious activity reports are made.
Generally the fund will then delegate performance of customer due diligence on its investors to an administrator. The AMLCO should be provided with periodic AML reports from the administrator and also reports on the fund's downstream investment activities, from its investment manager.
The administrator, fund or other service provider will need to comply with the Cayman AML Regulations.
Cayman AML procedures require:
assess and apply a risk-based approach to money laundering and terrorist financing risks and compliance
establish shareholder / limited partner / LLC member / unitholder identification procedures, including for beneficial owners, and conduct ongoing customer due diligence
implement suspicious transaction reporting procedures
maintain know-your-client information and suspicious transaction records
develop internal controls, policies, reporting procedures and record keeping that are appropriate to prevent money laundering and
implement an anti-money laundering training programme for staff members
Immediately from launch and ongoing obligation.
Existing funds should have designated natural persons as AMLCO, MLRO and DMLRO and have notified their details to CIMA via its REEFS portal.
Penalties under AML Regulations
Penalties under AML Regulations of up to CI$500,000 (US$609,750) and/or imprisonment for 2 years apply for breach of AML obligations.
Where an offence under the AML Regulations is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, a director, manager, partner, secretary or other similar officer of the entity or a person who was purporting to act in any such capacity the person, as well as the entity, commits that offence and is liable to be proceeded against and punished accordingly.
Penalties under the Monetary Authority Act and the Monetary Authority (Administrative Fines) Regulations
Breaches of certain provisions of the AML Regulations may also attract penalties under the MA Act and regulations.
Penalties for each breach classified as minor are up to CI$20,000. For each breach classified as serious the penalty is up to CI$50,000 for an individual or CI$100,000 for a body corporate and for each breach classified as very serious the penalty is up to CI$100,000 for an individual or CI$1,000,000 for a body corporate.
