Cayman Islands Enhances Anti-Money Laundering Measures with e-KYC and Remote CDD in Updated Guidance

The Cayman Islands Monetary Authority (CIMA) recently amended its Guidance Notes on the Prevention and Detection of Money Laundering, Terrorist Financing in the Cayman Islands to include provisions for e-KYC and remote customer due diligence (CDD) and ongoing monitoring. The amendments address inquiries from financial service providers (FSPs) regarding the use of technological solutions for non-face-to-face onboarding.

Key Changes:

1. Definitions:
   • Remote onboarding: Establishing new business relationships via technology solutions and non-face-to-face means.
   • E-KYC: Electronic verification of a customer’s identity.
   • Video-conferencing: Live, visual, and audio communication simulating a face-to-face meeting but not considered face-to-face.
   • Non-face-to-face business relationships: Establishing relationships or transactions without the customer’s physical presence.
2. Risk Assessment:
   • FSPs should assess ML/TF risks for delivery channels, including remote onboarding.
   • Customer identification methods should align with the FSP’s risk assessment.
   • Additional verification for higher ML/TF risk customers, products, services, or jurisdictions.
3. Policies and Procedures:
   • FSPs must have documented policies for utilizing new digital ID systems for CDD.
   • Considerations include tiered CDD, secure electronic record collection, anti-fraud measures, and cyber-security processes.
4. CDD for Legal Persons and Arrangements:
   • FSPs may use publicly available sources, including company registries, for verifying corporate legal persons.
5. Video Conferencing and ‘Selfie Documents’:
   • Video-conferencing can be used for onboarding corporate legal persons or legal arrangements.
   • Alternative measures required for unverifiable documents presented electronically.
6. Verification through “Selfie” Documents:
   • Photographs showing the person’s face, holding the identity document.
   • Clear scanned copies or photographs of the identity document itself for e-KYC measures.
7. Simplified Due Diligence:
   • FSPs may use digital ID systems/e-KYC processes with lower assurance levels for simplified due diligence in low ML/TF risk cases.
8. Record Keeping:
   • FSPs must ensure accessible and maintained records of identification data obtained through digital ID systems and e-KYC procedures.

The Authority encourages responsible adoption of non-face-to-face technologies by FSPs for mitigating money laundering and terrorist financing risks but emphasizes the need for effective risk management. Some FSPs may decide against adopting such technologies based on their business model and risk assessment.