The Cayman Islands has achieved another milestone in improving its understanding of how the jurisdiction can be misused for possible illicit purposes.
In response to recommendations made by the Caribbean Financial Action Task Force (CFATF) in the Mutual Evaluation Report of the Cayman Islands, published in March 2019, the Cayman Islands undertook and completed a National Assessment on Terrorism Financing Risk.
When geography and demographics are taken into consideration, the risk of funds for terrorist financing purposes being collected or used in the jurisdiction was judged to be low. At the same time, given the size and prominence of the Cayman Islands’ financial sector, the likelihood of funds connected to terrorist purposes moving through the jurisdiction was found to be a mere medium risk.
Indeed, prosecution and intelligence reports from foreign agencies relating to potential movement of funds through the Cayman Islands are limited. Yet, because of the challenges involved in detecting terrorist financing it must be assumed that the jurisdiction, like many others, is potentially vulnerable to misuse for terrorist financing.
The Cayman Islands had previously assessed the risks of terrorist financing in the jurisdiction as low in 2015. Using the new FATF Terrorist Financing Risk Assessment Guidance, the terrorist financing threats and vulnerabilities to the Cayman Islands as an International Financial Centre were again assessed. The slightly revised rating in the 2019 National Risk Assessment of Terrorism Financing, therefore, comes as a result of the new methodology and more precise data on the flows of funds.
This Risk Assessment was prepared by the Anti-Money Laundering Steering Group with input from several government agencies that have roles in combatting terrorist financing. These assessments enable the government agencies to better understand their risks and they can prioritise resources according to the level of risk. It will help the public and private sector understand the methods that can be used in the Cayman Islands, the threats and vulnerabilities and the risks that these activities can pose to the security of the Cayman Islands’ financial system. It will also help the private sector to better mitigate their terrorism financing risks.
(Submitted by GIS)