Frequently Asked Questions
What is the Financial Reporting Authority (FRA) (The Authority)? The Financial Reporting Authority (FRA) was established pursuant to The Proceeds of Criminal Conduct (Amendment) Law 2003 (PCCL) on 12th January 2004, which mandated that the FRA become a full-fledged civilian body, and that its function change from being an investigative to an analytical type financial intelligence unit.
The FRA is the financial intelligence unit of the Cayman Islands, and is the national agency responsible for receiving, requesting, analysing and disseminating financial information disclosures concerning proceeds of criminal conduct, in order to counter money laundering, terrorism, the financing of terrorism or suspicions of any of those crimes.
What is the FRA Organisation?
The Authority consists of a Director, a Legal Advisor, a Senior Accountant, a Sanctions Coordinator, an Administration Manager, and two (2) Senior Financial Analysts whom supervise a team of Financial Analysts. There are currently six (6) Financial Analysts at the Financial Reporting Authority (FRA).
The FRA office is located on the 4th floor of the New Government Administration Building at 133 Elgin Avenue, George Town, Grand Cayman, KY1-1102.
To whom does the FRA report?
The FRA is within the Cayman Islands Government Portfolio of Legal Affairs. The head of this portfolio is the Honourable Attorney General. However, the FRA also reports via the Anti-Money Laundering Steering Group (AMLSG), a body created by the same statute as the FRA. Chaired by the Honourable Attorney General, the Group consists of the Honourable Financial Secretary (Deputy Chairman), the Commissioner of Police, the Collector of Customs, the Managing Director of the Cayman Islands Monetary Authority (CIMA) and the Solicitor General. The AMLSG is responsible for the general oversight of the anti-money laundering policy of the Government. More specifically it determines the general administration, oversight and inspection of the work of the FRA including monitoring interaction and co-operation with overseas FRA counterparts and reviewing the FRA annual reports. It also promotes effective collaboration between regulators and law enforcement agencies. What does the FRA do?
The FRA’s main objective is to serve the Cayman Islands by participating in the international effort to deter and counter money laundering and the financing of terrorism.
A primary role of the FRA is to receive, analyse, request and disseminate disclosures of financial information, concerning the proceeds of criminal conduct, suspected proceeds of criminal conduct, money laundering (ML), or suspected money laundering, all of which are derived from any criminal offence committed in these islands or overseas if the criminal act satisfies the dual criminality test set out in the PCL; or the financing of terrorism (FT) which can be legitimately obtained money or the proceeds of criminal conduct as defined in PCL.
The FRA also serves as the contact point for international exchanges of financial intelligence within the provisions of the PCL. Financial intelligence is the end product of analysing one or several related reports that the FRA is mandated to receive from financial services providers and other reporting entities.
Our ability to link seemingly unrelated transactions allows us to make unique intelligence contributions to the investigation of money laundering and terrorist financing activities.
A key priority for the FRA is to provide timely and high quality financial intelligence to local and overseas law enforcement agencies through their local FIU, in keeping with the statutory requirements of the PCL. What are “disclosures of Financial Information or SARs?” Information is received by the FRA from a variety of sources worldwide but primarily SARs are received by the FRA from persons who are obliged by law to make them. Information is also received from counterpart FIUs and from overseas law enforcement agencies. The PCL lays an obligation to disclose upon: · Any person who knows or suspects or has reasonable grounds for knowing or suspecting that another person is engaged in criminal conduct (s.136 (1) (a) PCL). Who must report suspicious activity to the FRA?
Section 136 of the Proceeds of Crime Law (POCL) obligates any person who ‘knows or suspects or has reasonable grounds for knowing or suspecting that another person is engaged in criminal conduct, where the information or other matter on which his knowledge is based, or which gives reasonable grounds for such knowledge or suspicion, came to him in the course of a business in the regulated sector or other trade, profession, business or employment’, to submit the required report to a nominated officer, or the FRA, as soon as is practicable after the information or other matter comes to that person.
Section 137 of POCL obligates any nominated officer who ‘knows or suspects or has reasonable grounds for knowing or suspecting that another person is engaged in criminal conduct, where the information or other matter on which that person’s knowledge is based, or which gives reasonable grounds for such knowledge or suspicion, came to that person in the course of business in the regulated sector or in consequence of a disclosure made under section 136’, to submit the required disclosure to the FRA as soon as is practicable after the information or other matter comes to that person. A nominated officer means a person nominated by the business concerned for the purpose of receiving reports relating to criminal conduct. What powers does the FRA have to do its work? The Financial Reporting Authority is responsible for receiving, requesting, analyzing and disseminating disclosure information. In any stage of the process, an analyst at the FRA might require additional information from the SAR filer or third party. The FRA has the powers to issue a Section 4 (2) (c) directive to obtain additional information.
The law does provide the FRA with the power to acquire additional information to analyse, (s. 4 (2) (c) PCL 2020), i.e. · To require the provision by any person of information for the purpose of clarifying or amplifying information disclosed in a SAR or responding to a request from an overseas FIU, (legal advisors in privileged circumstances, e.g. Court work excepted). Any person who, without reasonable excuse, fails to so provide the information is liable to a fine of CI$50,000 and or two years imprisonment. The information must be provided within 72 hours. Financial service transactions occur very quickly. Consequently, during the time required to receive, analyse and onwardly disclose to law enforcement, the funds that are the subject of the report can move beyond the reach of the investigating authorities. Therefore, the law makes provision for the FRA to apply to the Grand Court to exercise its power to freeze funds for a limited period, (s. 4 (2) (b) PCL 2020), i.e. · To order any person to refrain from dealing with a person’s bank account for a period not exceeding 21 days. The FRA and Grand Court must be satisfied that there is reasonable cause to believe that the information in a SAR or a request from an overseas FIU relates to the proceeds of criminal conduct, money laundering, terrorism or the financing of terrorism, or suspicions of these crimes. The financial business of the Cayman Islands is predominantly international and the concept of financial confidentiality is both inter-agency and international. Financial intelligence about terrorist financing particularly relies upon collaboration with overseas FIUs to gain insight into their networks, which may infiltrate many countries financial systems. To acquire information from and provide information to authorised agencies and between nations and yet to retain measures of control over the use to which the information is put requires a detailed agreement between the concerned parties. Therefore, the law provides a power for the FRA, subject to the consent of the AMLSG, to enter into such agreements, where the Director considers necessary or desirable for the discharge of FRA duties, (s. 4 (2) (e) PCL 2020). The FRA may, with the approval of the AMLSG, issue guidelines setting out any features of a transaction that may give rise to suspicion of criminal conduct, the forms and procedures for making a SAR and the operational procedures of the FRA in connection with SAR handling.
To whom does the FRA disseminate or onwardly disclose information?
The FRA operates at arm’s length from the police or other governmental departments and agencies to which it either must or may provide financial intelligence. If the FRA suspects that information it receives to be criminal conduct or that it is prima facia evidence of criminal conduct then the FRA must inform a law enforcement agency and/or a Competent Authority with responsibility for AML and CFT supervision in the Cayman Islands:
· Anti-Corruption Commission (ACC); · Cayman Islands Customs & Border Control (CBC); · Royal Cayman Islands Police Service (RCIPS); · Cayman Attorneys Regulation Authority · Cayman Islands Institute of Professional Accountants · Cayman Islands Monetary Authority (CIMA); · Department of Commerce and Investments (DCI); and · Registrar of Companies
In addition, the FRA is a Member of the Egmont Group and will respond to other overseas FIUs request for information and disseminate spontaneous disclosures to other jurisdictions where there is reason to suspect criminal offence and that identifies a connection to their respective country.
How does the FRA maintain confidentiality? The PCL provides the framework for the protection of information obtained by the FRA. Furthermore a layered approach to security has been adopted for the FRA’s office and systems. Protecting financial information received from reporting entities is a critical function of the FRA. Computer security measures include advanced firewalls to prevent unauthorised access to our database.
In addition staff are aware of their responsibilities to protect information, and severe penalties exist, under the PCL, for the unauthorised disclosure of information in our possession and control.
What is the purpose of disseminating information? The PCL (2020) s. 138 authorises the Financial Reporting Authority to disseminate information based on the following: (a) Shall, where it has cause to suspect that criminal conduct has been committed, disclose any information received under this Law to any law enforcement agency in the Islands;
(b) may, where it has cause to suspect that criminal conduct has been committed, disclose any information received under this Law to the Cayman Islands Monetary Authority established by section 5 of the Monetary Authority Law (2020 Revision), the department in Government charged with responsibility for international tax matters, any public body to whom the Cabinet has assigned the responsibility of monitoring compliance with money laundering regulations under section 4(9) or to such other institutions or persons in the Islands as may be designated in writing by the Steering Group; and
(c) may, where it has cause to suspect that a criminal conduct has been committed disclose any information received under this Law to any overseas financial intelligence unit, or, (i) report the possible commission of an offence; (ii) initiate a criminal investigation respecting the matter disclosed; (iii) assist with any investigation or criminal proceedings respecting the matter disclosed; (iv) facilitate the effective regulation of the financial services industry; or (v) generally give effect to the purposes of this or any other law. |
