Cmrai Regulatory Update: June 2023 to December 2023

Overview

This regulatory update provides a comprehensive review of the key legislative and regulatory developments at the Cayman Monetary Regulatory Authority International (the “Authority” or “Cmrai”) for the period between June 2023 and December 2023. Subscribers can receive notifications of future updates by signing up for E-Alert notifications on the Authority's website.

Legislative Amendments

On 26 May 2023, several amendments to regulatory Acts were gazetted and published, expanding the Authority’s powers to impose administrative fines, hold partnerships and other unincorporated entities accountable for offenses, and facilitate information sharing and disclosures. These updates serve to enhance regulatory oversight and ensure compliance. The key Acts amended include:

1. Monetary Authority Act (Amendment) Act, 2023
2. Companies Management (Amendment) Act, 2023
3. Directors Registration and Licensing (Amendment) Act, 2023
4. Insurance (Amendment) Act, 2023
5. Money Services (Amendment) Act, 2023
6. Securities Investment Business (Amendment) Act, 2023
7. Virtual Asset (Service Providers) (Amendment) Act, 2023

Regulatory Updates

1) Consolidated Supervision Policy

In November 2023, the Authority published a revised Regulatory Policy on Consolidated Supervision. This policy aims to ensure comprehensive oversight of entities that are part of a larger group, particularly assessing the risks posed to the regulated entity and its affiliates.

2) AML Guidance Notes (August 2023)

The Authority published updated Guidance Notes on the Prevention of Money Laundering and Terrorist Financing in August 2023, consolidating various updates including provisions for electronic Know Your Customer (e-KYC) and virtual asset service providers.

3) Record Keeping Rule for Company Management

A new Rule and Statement of Guidance for the retention and accessibility of records for licensed company managers were gazetted in August 2023, with implementation effective 1 April 2024. This rule sets standards for secure and accessible record-keeping.

4) Domestic Systemically Important Institutions

A Rule and Regulatory Policy for Domestically Important Deposit-Taking Institutions was published in May 2023, with implementation set for May 2024. This policy applies to critical institutions that have been designated as systemically important to the financial system.

5) Corporate Governance and Internal Controls

In October 2023, two significant rules regarding corporate governance and internal controls for regulated entities came into effect. These measures establish minimum standards for governance structures and control systems for regulated financial institutions, with a proportional application based on the entity’s size and complexity.

External Assessments

1) FATF Grey List Removal

On 27 October 2023, the Cayman Islands was officially removed from the Financial Action Task Force (FATF) Grey List, acknowledging the jurisdiction's compliance with global anti-money laundering standards.

2) EU Delisting Process

In December 2023, the European Union began the process of removing the Cayman Islands from its AML List, a critical step in confirming the jurisdiction's compliance with EU standards.

3) UK Delisting

As of 5 December 2023, the UK Government removed the Cayman Islands from its list of high-risk jurisdictions for anti-money laundering and counter-terrorist financing purposes.

Industry Outreach and Consumer Education

Deposit-Taking Institutions

To assist consumers, the Authority provides quarterly updates on fees charged by domestic deposit-taking institutions for services such as cash withdrawals, cheque deposits, and account maintenance. The most recent fee summary was published on 1 November 2023.

Insurance Stress Testing Guidance

In June 2023, the Authority issued updated stress testing guidelines for insurers. These guidelines provide a framework for assessing financial resilience under various risk scenarios, though insurers are encouraged to go beyond these minimum requirements as needed.

Cybersecurity and Cyber Resilience

In June 2023, the Authority published its Thematic Cybersecurity Review Report, analyzing cybersecurity practices within the banking, insurance, and securities sectors. The report highlights good practices and areas for improvement to enhance the resilience of regulated entities.

For further inquiries or clarifications on any of the updates mentioned, the public is encouraged to contact the Authority directly.