Offshore Funds AML News

Both the BVI and Cayman Islands have been busy recently with changes to their AML regimes for investment funds.

BVI funds – electronic and digital AML checks now allowed

In August the BVI introduced changes to their AML Code (the BVI financial services industry’s rule book for customer verification and KYC), so that BVI investment funds and other credit and financial institutions based in the BVI can rely on the latest electronic innovations to improve and speed up customer verification processes.

The amendments mainly deal with the verification of individuals and now allow funds to use electronic and digital verification, as well as more traditional paper based processes, including proprietary software and/or programs and verification by digital, electrical, magnetic, optical, electromagnetic, biometric and photonic form. The changes also set out factors for BVI funds to take into account if they’re relying on third party platforms, like blockchain providers, in their verification processes. These include being satisfied that the information from the platform is sufficiently extensive, accurate and reliable, as well as checking and monitoring the reliability and independence of the platform provider itself.

The changes also helpfully confirm that for electronic or digital ID verification which isn’t held ‘face to face’, a BVI fund does not automatically need to treat an applicant for business or a customer as high risk.

With the increased reliance on financial technology around the world, these changes are timely and show the BVI’s commitment to amending its’ laws to embrace new technology. If you’d like more information on them please contact any of the blog team or take a look at our recent client briefing.

Cayman funds – 30 September AML officer deadline approaching

As Natalie noted in her recent blog, Cayman investment funds now need to appoint natural persons as their AML officers (money laundering reporting officer, deputy money laundering reporting officer and AML compliance officer), whether they’re regulated under the Mutual Funds Law or unregulated. This marks a change from the previous common practice of funds delegating their AML functions to a service provider, like their administrator, and not appointing individuals to these roles.

Funds that existed on 1 June 2018 have until 30 September 2018 to make these appointments and, if they’re regulated, file details with the Cayman Islands Monetary Authority (CIMA). New funds now have to appoint these officers when they launch, and also file details with CIMA if they’ll be regulated.

Individuals from a fund’s service provider can be appointed as a fund’s AML officers, for example if the fund doesn’t have suitable individuals available inhouse, and here at Harneys our Fiduciary team is happy to help clients with these roles. More information can be found in our compliance consultancy brochure. Please also see our recent more detailed alert for more information on what funds and other investment entities need to do for these appointments.

Fiona Chandler
Experienced funds and corporate lawyer, loves to travel. Fiona lives in the UK.

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