United States Department of the Treasury Financial Crimes Enforcement Network
Subject: Transactions Involving The Cayman Islands Date: July 2000 Advisory: Issue 14
This Advisory is being issued to inform banks and other financial institutions operating in the United States of serious deficiencies in the counter-money laundering systems of the Cayman Islands. The impact of such deficiencies on the scrutiny that should be given to certain transactions or banking relationships involving the Cayman Islands, in light of the suspicious transaction reporting obligations of financial institutions operating in the United States, is discussed below.
The Cayman Islands, located between Cuba and Honduras in the Caribbean Sea, is a Caribbean dependent territory of the United Kingdom. Its population is approximately 40,000.
Notwithstanding its small land area and population, the Cayman Islands is home to a well-developed offshore financial center. In March 2000, authorities in the Cayman Islands reported that more than 570 banks and trust companies, 2,238 mutual funds, and 499 captive insurance companies were licensed in the Cayman Islands. In addition, approximately 40,000 offshore companies are registered in the Cayman Islands.
The counter-money laundering regime embodied in the legal, supervisory, and regulatory systems of the Cayman Islands suffers from serious systemic problems.
