Frequently Asked Questions

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 constitution and powers, functions and duties of the FRA are found in sections 3 & 4 of The Proceeds of Crime Act (2024 Revision) (the POCA)

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.

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 Proceeds of Crime Act (POCA); or the financing of terrorism (FT) which can be legitimately obtained money or the proceeds of criminal conduct as defined in the POCA.

The FRA also serves as the contact point for international exchanges of financial intelligence within the provisions of the POCA. 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 POCA.

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 to the Anti-Money Laundering Steering Group (AMLSG), a body created by the same statute as the FRA. The AMLSG is chaired by the Hon. Attorney General and the membership comprises the Chief Officer in the Ministry responsible for Financial Services or the Chief Officer’s designate (Deputy Chairman), the Commissioner of Police, the Director of CBC (formerly the Collector of Customs), the Managing Director of CIMA, the Solicitor General, the Director of Public Prosecutions, the Chief Officer or Director, as the case may be, of the department in Government charged with responsibility for monitoring compliance with anti-money laundering and counter terrorism measures for Designated Non-Financial Businesses and Professions (“DNFBPs”) and the Chairman of the ACC (added in 2019). The Director of the Financial Reporting Authority is invited to attend meetings, as is the Head of the Anti-Money Laundering Unit, who also serves as secretary.

The AMLSG has responsibility for oversight of the anti-money laundering policy of the Government and determines the general administration of the business of the FRA. It also reviews the annual reports submitted by the Director, promotes effective collaboration between regulators and law enforcement agencies and monitors the FRA’s interaction and cooperation with overseas FIUs.

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 using the services of their country’s FIU.

A SAR should be made as soon as the knowledge or suspicion that criminal proceeds exist has arisen or at the earliest opportunity thereafter.

In late 2020, the Financial Reporting Authority (FRA) launched its AMLive Reporting Portal (the Portal), which allows Reporting Entities to submit Suspicious Activity Reports (SARs) electronically. Reporting Entities are being registered and provided with their user credentials for the Portal. Once a Reporting Entity receives its user credentials, subsequent SARs should be submitted via the Portal.

In the event a Reporting Entity is not registered, SARs should continue to be submitted through the FRA’s email address (financialreportingauthority@gov.ky) using the Suspicious Activity Report (SAR) Form and must be password protected. The password can be provided via a voice message at the extension (345) 244-5711.

If you have any queries, feel free to call (345) 244-5711 or (345) 945-6267, or email financialreportingauthority@gov.ky

Section 136 of the Proceeds of Crime Act (POCA) 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 the POCA 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.

Yes, anyone can file a SAR. 

The POCA imposes 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) POCA). 

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 (CARA);
  • Cayman Islands Institute of Professional Accountants (CIIPA);
  • 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 requests for information from overseas FIUs and disseminate spontaneous disclosures to other jurisdictions where there is reason to suspect that a criminal offence has been committed and that a connection to the requesting country has been established.

Money Laundering is the process used to conceal the true origin and ownership derived from the proceeds of criminal activities (predicate offence). There are three stages in the money laundering process:

1. Placement involves inserting the proceeds derived from illegal activity into the financial system. This stage may involve cash deposits into a bank account at a financial institution.

2. Layering involves attempting to camouflage the source of funds, audit trail and ownership of funds by creating complex layers of financial transactions. This stage may involve transactions such as purchasing securities, bitcoin, commodities and property with the funds deposited in the placement stage.

3. Integration involves integrating the laundered proceeds back into the economy to provide the perception that the funds derive from legitimate activities. This stage may involve transactions such as selling securities, to provide the perception that the funds derived from investing in the stock market.

There are two reporting thresholds in the Cayman Islands:

1) Class A and B Banks:

  • ANTI-MONEY LAUNDERING (CLASS A AND CLASS B BANK THRESHOLD REPORTING) REGULATIONS, 2022

 

2) Money Service Businesses: 

  • ANTI-MONEY LAUNDERING (MONEY SERVICES BUSINESS THRESHOLD REPORTING) REGULATIONS, 2020

 

The Financial Reporting Authority is responsible for receiving, requesting, analysing 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 in accordance with the Proceeds of Crime Act (2024) 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 transactions occur very quickly. Consequently, during the time required to receive, analyse and disclose information 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 under s. 4 (2) (b) of the POCA), which states:

(2) Without limiting subsection (1) and notwithstanding any other Law to the
contrary, the Financial Reporting Authority –

(b) may, subject to subsection (3) —

(i) where information is disclosed to the Financial Reporting Authority
under this Law; or

(ii) upon receipt of a request from an overseas financial intelligence unit,

order any person to refrain from dealing with a person’s account for a
period not exceeding twenty-one days if satisfied that there is reasonable
cause to believe that the information or the request, as the case may be,
relates to proceeds or suspected proceeds of criminal conduct.

Suspicious transactions are financial transactions in which there are reasonable grounds to suspect the transactions are related to the proceeds of criminal conduct as defined in the POCA. While the types of transactions, which may be used by a money launderer, are almost unlimited, a suspicious transaction will often be one, which is inconsistent with a customer’s known, legitimate business or personal activities or with the normal business for that type of facility. Therefore, the first key to recognition is knowing enough about the customer’s business to recognise that a transaction, or series of transactions, is unusual.

Terrorist Financing is the process of acquiring funds, goods or assets and other resources by legal or illegal means. The funds, goods or services could be aggregated in order to accumulate cash or physical resources. The funds or resources would be used to assist or encourage in the planning of terrorism acts. The funds are used to facilitate or implement terrorist activities. The end goal of individuals conducting Terrorist Financing is the conducting terrorist activities, the funds and resources are simply acquired to achieve the activity.

You must:

i) check whether you maintain any accounts or hold any funds or economic resources for persons set out in the UK Sanctions List and any entities owned or controlled by them;

ii) freeze such accounts, and other funds or economic resources;

iii) refrain from dealing with the funds or economic resources or making them available directly or indirectly to or for the benefit of designated persons unless licensed by the Governor or an exception applies;

iv) refrain from providing trust services to or for the benefit of the persons set out in the UK Sanctions list;

v) report any findings to the FRA at financialsanctions@gov.ky, together with the information or other matter on which the knowledge or suspicion is based by completing and submitting a Compliance Reporting Form (CRF). Where the information relates to funds or economic resources, the nature and quantity should also be reported.

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If you have any queries, feel free to call (345) 244-5711 or (345) 945-6267, or email financialreportingauthority@gov.ky