The presence on such lists has been a shadow over the affected jurisdictions, so their removal is a cause for celebration. The Cayman Islands aims to benefit from its status.

The Ministry of Financial Services and Commerce of the Cayman Islands has toasted its recent removal from the European Union’s and FATF’s “grey list” of jurisdictions with deficiencies in their anti-money laundering and counter-terrorist finance controls.

The removal from these lists was the result of “significant work” carried out to ensure that the jurisdiction’s AML/CFT framework complies with international standards.

The FATF, aka Financial Action Task Force, took the Cayman Islands from its list of jurisdictions under “increased monitoring” last October. The EU, meanwhile, took the Cayman Islands from its list, effective 7 February.

Bodies such as the FATF – an inter-governmental body – and the EU have campaigned to tighten controls on illicit finance and weed out offshore tax evasion in recent years. Governments, particularly as public debt has risen, have sought to squeeze what they consider unacceptable use by such offshore centres for those seeking to minimise tax. The imposition of sanctions on Russia in 2022 after the Ukraine invasion has also given an added edge to the campaign against money laundering.

The reputational costs of being on such lists – notwithstanding queries about whether “onshore” jurisdictions can also have poor practices – can be significant. Hence the Cayman Islands' delight at recent events.

A positive move
“Our removal from both lists, as well as the UK’s list, of high-risk third countries for AML purposes, speaks to the Cayman Islands’ enduring commitment to being a global partner in combatting money laundering and other forms of illicit finance,” the Ministry of Financial Services and Commerce of the Cayman Islands, said in a statement emailed to this publication.   

“The jurisdiction worked diligently and cooperatively to complete 63 recommendations based on the FATF’s global standard, including implementing the global standard for beneficial ownership; and by introducing monitoring and fines for non-compliance,” it continued. 

“Removal from the EU’s list means that EU financial institutions are not required to take enhanced due diligence measures in relation to persons/entities from the Cayman Islands,” the government said. “Removal thus improves Cayman’s competitiveness and reduces the cost of doing business both for EU institutions and Cayman wealth management and the financial services sector.”

The government said the lists’ purpose is similar to providing an easily understood “grade” that draws attention to jurisdictional compliance for AML standards.

“The Cayman Islands’ assessment experience with the FATF was that, while it undoubtedly was rigorous, it resulted in much improved understanding of ML/TF risk and the appropriate calibration and enhancement of measures to address those risks,” the government added.