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New CIMA procedure [12 March 2018] - Appointing AML Auditors

"...all entities conducting relevant financial business are required to maintain an appropriate, effective, risk based and independent AML Audit function"

Mon 12 March 2018, Cayman Islands.

The Cayman Islands Monetary Authority ("CIMA") issued a new Regulatory Procedure today which sets criteria for the appointment of AML Auditors in situations of enforcement or supervisory action.

This is anticipated to occur where CIMA discovers that a firm has not completed an AML Audit or where there is a need for an additional AML Audit. In those cases CIMA's approval of the Auditor will be required including the Auditor's fees and costs.

Of note, CIMA will approve the scope of the Auditor's role and the timelines for any proposed remedial action, but will not approve the appointment where the Auditor is or appears to be conflicted.

Finally, if the appointment of an AML Auditor is an enforcement action (as opposed to Supervisory Action) then CIMA may identify the AML Auditor to be appointed and further criteria will be considered in the approval, including whether the Auditor has expertise in the respective industry, its previous dealings with, or appointments by, CIMA, its presence in other jurisdictions and its resources.

Whilst all entities conducting relevant financial business are required to maintain an appropriate, effective, risk based and independent AML Audit function, the new procedure, and its criteria, apply where the appointment is made as a result of enforcement or supervisory action by CIMA.

In principle, since the failure to maintain an AML Audit is a breach of the Regulations, CIMA may impose a fine according to the Monetary Authority (Administrative Fines) Regulations issued in December 2017.

The regulatory risk is substantially increased where firms have not already had an AML Audit, as CIMA will either require the appointment of an AML Auditor, at a potentially greater cost, or fine the firm, or both.

For more information regarding Liberty's AML Audit and complimentary services please contact us today. 

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