Does holding offshore jurisdictions to higher AML standards really assist in preventing money laundering?
| DOI | https://doi.org/10.1108/JMLC-10-2021-0116 |
| Published date | 17 November 2021 |
| Date | 17 November 2021 |
| Pages | 742-756 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
| Author | Andrew James Perkins |
Does holding offshore
jurisdictions to higher AML
standards really assist in
preventing money laundering?
Andrew James Perkins
Department of Law, Truman Bodden Law School, Grand Cayman,
Cayman Islands
Abstract
Purpose –This paper aims to contend that when tackling financial crimes such as money laundering and
terrorist financing, internationalregulators are seeking to hold offshore jurisdictions such as the Cayman Islands
to higher standards and that this detracts from the pursuit of detecting and prosecuting money launders.
Design/methodology/approach –This paper will deal with the following perceived issues: firstly, to
offshore jurisdictions as a concept; secondly, to outlinethe efforts made by the Cayman Islands to combat
money laundering and to rate these changes against Financial Action Task Forces’(FATAF’s) technical
criteria; thirdly, to demonstrate that the Cayman Islands is among some of the world’s top jurisdictions for
compliance with FATAF’s standards; and finally, to examine whether greylisting was necessary and to
comment upon whether efforts by international regulators to hold offshore jurisdictions to higher standards
detractsfrom the actual prosecution of money laundering within the jurisdiction.
Findings –Greylisting the Cayman Islands in these authors’view was something that should have never
happened; the Cayman Islands is being held to standards far beyond what is expected in an onshore jurisdiction.
There is a need for harmonisation in respect of international anti money laundering rules and regulations to shift
the tone to prosecution and investigation of offences rather than on rating jurisdictions technical compliance with
procedural rules where states havea w orkableanti-money laundering (AML) regime.
Research limitations/implications –The implications of this research are to show that offshore
jurisdictionsare being held by FATAF and other internationalregulators to higher AML standards than their
onshore counterparties.
Practical implications –The author hopes that this paper willbegin the debate as to whether FATAF
needs to give reasons as to why offshore jurisdictions are held to higher standards and whether it needsto
begin to contemplatehigher onshore standards.
Originality/value –This is an original piece of research evaluating the effect of FATAF’s reporting on
offshore jurisdictions with a case study involving primary and secondary data in relation to the Cayman Islands.
Keywords Anti-money laundering, Cayman Islands, FATAF, Offshore jurisdictions,
Prosecuting money laundering
Paper type Research paper
The Cayman Islands are an island group and overseas territory of the UK in the Caribbean Sea,
comprising the islands of Grand Cayman, Little Cayman and Cayman Brac and situated about
180 miles (290 km) northwest of Jamaica [1][2]. The Islands are home to over 60,000 [3] people,
This was not a funded piece of research. However author would like to thank Dr John Epp, Professor
Amy Wallace, Ms Elaine Ward and Mr Xavian Ebanks for their comments on this piece. Any errors
in drafting or of course author’s own.
JMLC
25,4
742
Journalof Money Laundering
Control
Vol.25 No. 4, 2022
pp. 742-756
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-10-2021-0116
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