On 5th August 2020, the Cayman Islands Monetary Authority (CIMA) discontinued and removed its “Equivalent Jurisdiction Regime” (EJR) list from use and application to Cayman Islands domiciled investment entities and funds (Funds).
The EJR list, which had previously contained over 40 separate countries, allowed persons conducting relevant financial business from or within the Cayman Islands to place reliance on AML/CFT legislation of specified countries for simplified customer due diligence. Now removed, the responsibility of determining the anti-money laundering (AML) risk ratings applicable to the countries detailed in the EJR list has moved to the persons conducting the relevant financial business (e.g. Fund Board / Fund Administrator) (FSP).
Following the removal of the EJR list, it is possible that previous regulatory exemptions applied to certain countries may no longer meet the Cayman Islands AML requirement for the application of SDD. The AML regulations and accompanying guidance notes say that in order for SDD to be applied, a person, or applicant for business who is or appears to be acting as an agent or nominee for a principal, must be based or incorporated in or formed under the law of a country which the FSP assesses as having a low degree of risk of money laundering and terrorist financing.
The immediate effects of the list’s removal; and any reliance which has continued to be placed on it by FSP are yet to be determined, however, a review of the internal country AML risk classifications and the application of SDD on investors is warranted to ensure continued compliance with the AML regulations in place.