Cayman included on FCA high-risk list

  • Ugland House: Home to many Cayman-based companies

    Ugland House: Home to many Cayman-based companies


FCA’s high risk country list

Afghanistan, Algeria, Angola, Argentina, Azerbaijan, Bahrain, Bangladesh, Belarus, Benin, Bolivia, Bosnia and Herzegovina, Brazil, Bulgaria, Burundi, Cambodia, Cayman Islands, China, Colombia, Republic of the Congo, Democratic Republic of Congo, Cuba, Djibouti, Dominican Republic, Ecuador, Egypt, Equatorial Guinea, Eritrea, Ethiopia, Fiji, Gabon, Guatemala, Guinea, Guinea-Bissau, Haiti, Honduras, India, Indonesia, Iran, Iraq, Israel, Ivory Coast (Cote d’Ivoire), Jamaica, Kazakhstan, Kenya, Korea (North), Kosovo, Kuwait, Kyrgyzstan, Laos, Latvia, Lebanon, Liberia, Libya, Malaysia, Mali, Mexico, Montenegro, Morocco, Myanmar, Nauru, Nepal, Nicaragua, Niger, Nigeria, Pakistan, Palestine, Panama, Romania, Russia, Saudi Arabia, Serbia, Seychelles, Sierra Leone, Somalia, South Africa, Sri Lanka, Sudan (North), Sudan (South), Suriname, •Swaziland, •Syria, Tajikistan, Tanzania, Thailand, Tunisia, Turkey, Turkmenistan, UAE, Ukraine, Uzbekistan, Vatican City, Venezuela, Yemen, Zambia and Zimbabwe.

The Cayman Islands, an important international business competitor for Bermuda, is expressing “consternation” that they have been included on a new list of high risk jurisdictions for financial crime.

There are a total of 95 countries listed including Brazil, Afghanistan, Cuba, Russia, China, Iraq, the Republic of Congo and Jamaica.

The United Kingdom’s newly established Financial Conduct Authority (FCA) has collated the list, which it updates quarterly. Cayman is on the list released on July 19.

The role of the FCA is to provide the Authorisations Division information with which to assess and process applications from firms seeking to conduct regulated financial service activities in the UK.

The FCA said: “We categorise jurisdictions in accordance with the current level of risk posed by firms and other actors operating in these jurisdictions and the impact they may have on the FCA’s financial crime objectives.

“In particular, these objectives are linked to tackling money laundering, sanctions systems and controls, terrorist financing, and bribery and corruption.”

The FCA explained they assess jurisdictions using publicly available information and indices. “During supervisory visits to assess firms’ AML controls, we tend to focus on business relationships which have higher risk factors. The factors we take into account include, but are not limited to: country risk, company structures, political connections, the customer’s or beneficial owner’s reputation, source of wealth, source of funds, expected account activity, sector risk, and involvement in public contracts.”

Cayman’s large banking sector may have led to their inclusion on the list, said Peter Everson, president of PE Consultants Ltd, who is also a director of the Bermuda Tourism Authority.

He said: “Whilst Bermuda and the Cayman Islands have many similarities with respect to their international business sectors and in many cases are fierce rivals there is one important difference which may be have led to the inclusion of the Cayman Islands on the FCA’s list of high risk countries. The Cayman Islands are host to numerous international banks and thus their banking sector is far larger and more diverse than Bermuda’s. This raises the difficulty for the Cayman Island regulators in policing these banks and their clients”.

Ross Webber, Bermuda Business Development Association’s (BDA) newly appointed chief executive officer, said: “Bermuda’s absence from this list is a testimony to the fact that we have always operated with prudence and integrity.

“The Government and the BMA have worked for years to ensure Bermuda maintains the appropriate compliance regime and to maintain a conducive business environment. We have always sought to walk the high ground and our omission from this list is a reflection on the fact that this is understood and recognised.”

Cayman’s Minister of Financial Services, G Wayne Panton, in a letter to the FCA’s board chairman John Griffith-Jones, said: “The Cayman Islands Government has noted, with great consternation, the inclusion of the Cayman Islands on the list of the Financial Conduct Authority’s ‘High Risk Countries’ ...” and called the island group’s inclusion “wholly arbitrary”.

Mr Panton argued: “ ... it is contrary to our consistent adherence to international AML-CFT standards — a practice for which we have been favourably assessed by independent, supranational organisations.”

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Published Aug 20, 2014 at 12:01 am (Updated Aug 20, 2014 at 2:32 pm)

Cayman included on FCA high-risk list

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