Cayman Islands: Anti Money‐Laundering Legislation — The Proceeds of Criminal Conduct Law 1996
| DOI | https://doi.org/10.1108/eb027127 |
| Published date | 01 January 1997 |
| Date | 01 January 1997 |
| Pages | 104-110 |
| Author | Daniel Harris,Stephen Hellman |
| Subject Matter | Accounting & finance |
Journal of Money Laundering Control 1/1
Cayman Islands: Anti Money-Laundering
Legislation — The Proceeds of Criminal Conduct
Law 1996
Daniel Harris and Stephen Hellman
'Q.
Why the Caymans? You could have gone
anywhere. You had a lot of money. You could
have gone to Paris, the Bahamas?
A.
Easy, . . . saw a movie "The Firm", put the
idea in my head, let's go there.' (Extract from
deposition taken in US civil proceedings, where
the deposed party is being questioned as to why
he chose to launder stolen money through the
Cayman Islands)
The Cayman Islands arc one of the world's leading
offshore centres. They are blessed with a stable
democracy, which is underpinned by the Islands'
status as a British Crown Colony, a sophisticated
financial industry, and no direct personal taxation.
The confidentiality of banking and business trans-
actions is protected by the stringent provisions of
the Confidential Relationships (Preservation) Law
(1995 Revision).1 These conditions arc doubtless
attractive not only to legitimate investors but to
those seeking to launder the proceeds of crime.
The Proceeds of Criminal Conduct Law 1996 ('the
Law') results from a desire to secure both the
integrity of Cayman's financial system and the per-
ception of its integrity within the international
community. Hence its purpose is partly political
and diplomatic.2 The Law is Cayman's flagship
piece of
anti
money-laundering legislation.
LEGISLATIVE BACKGROUND
The Law was not enacted in a vacuum. It is based
on the English Criminal Justice Act 1993, which,
with accompanying regulations, implemented the
European Council Directive dated 10th June,
1991.
The Law may have been intended to bring
Cayman into line with recommendation no. 5
made by the Financial Action Task Force (FATF)3
in its report of April 1990 that countries should
consider criminalising the laundering of proceeds
of crime when unrelated to drug trafficking. The
recommendation was endorsed by the Caribbean
Financial Action Task Force,4 which prepared a
report evaluating the extent of Cayman's compli-
ance with its international obligations in respect of
measures to combat transnational crime in Feb-
ruary 1995. The Law itself excludes the proceeds
of drug trafficking offences as these are already
covered by The Misuse of Drugs Law (1995 Revi-
sion).5 It should be noted that the Mutual Legal
Assistance (United States of America) Law 1986,
which gives effect to the Treaty concerning the
Cayman Islands and Mutual Legal Assistance in
Criminal Matters,6 had earlier provided for coop-
eration between Cayman and the US with respect
to the investigation of crime. It provided that each
shall assist the other to the extent permitted by
their respective laws in proceedings related to,
inter
alia, the forfeiture of the proceeds of criminal
offences, and overrode Cayman confidentiality law.
'Under the Law and the Treaty the policy has
clearly been adopted that the sanctions imposed to
buttress the duty of confidentiality shall give way
to demands for the suppression of crime.'7 The
Law appears to be part of an ongoing legislative
process to combat international crime. The
Cayman Islands Government has recently pub-
lished The Mutual Legal Assistance Treaty (1988
United Nations Convention) Bill 1997 to imple-
ment the provisions of the Vienna Convention8 in
domestic law. If enacted, it will allow the Cayman
Islands to offer assistance at an investigative stage
to all other signatories to the Convention with
respect to drug trafficking offences, including
money laundering.
OVERVIEW
The Law came into force on 23rd December,
1996.
It provides for (i) the making of confiscation,
restraint and charging orders and their administra-
tion and enforcement and (ii) the enforcement in
Cayman of confiscation orders ('external confisca-
tion orders') and related proceedings made or
Page 104
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