CAYMAN ISLANDS Law and Practice Contributed by: Daniel Lee, Sophia Scott, Kimberly Robinson and James Turner, Maples Group
cific risk disclosures in offering documents, including cybersecurity and transferability risks. Cayman Islands Removed from FATF Grey List and EU AML List On 27 October 2023, the Financial Action Task Force (FATF) confirmed that the Cayman Islands had been removed from the FATF’s increased “monitoring list” (often referred to as the FATF Grey List). This deci - sion came after the Cayman Islands demonstrated its commitment to international standards by satisfy - ing all FATF Recommended Actions and successfully completing an on-site inspection by the FATF in 2023. On 12 December 2023, the European Commission published a Delegated Regulation amending its list of “high-risk third countries” (the “EU AML List”), pro - viding for the removal of the Cayman Islands. The removal was made effective on 7 February 2023. The removal from both the FATF and EU AML Lists affirms that the Cayman Islands has robust and effec - tive AML/CFT/CPF regimes in place, reflecting the jurisdiction’s commitment to maintaining a compliant financial sector that aligns with global standards. The Cayman Islands is now preparing for its 5th Round Caribbean Financial Action Task Force Mutual Evalu - ation, with an on-site visit scheduled for December 2027. Cayman Islands Sanctions Regime Sanctions Orders are extended by Statutory Instru - ment to the British Overseas Territories, including the Cayman Islands, to give effect to sanctions regimes implemented by the UK government (“Sanctions Orders”). Sanctions Orders apply to any person or body incor - porated or instituted in the jurisdiction, as well as any British citizen or subject ordinarily resident. They gen - erally restrain persons from dealing in funds or eco - nomic resources owned or controlled by, or making funds or economic resources available to Designated Persons. For example, a fund making a redemption payment to a Designated Person would not be per - mitted.
Since March 2022, significant sanctions measures with respect to Russia’s invasion of Ukraine have been published by the UK, USA and the EU. A number of Cayman Islands vehicles have been impacted as a result of direct or indirect exposure to Russian indi - viduals and/or entities. While these entities have been able to apply to the Governor for a specific licence to permit otherwise prohibited activities, until recently, licences could only be granted under specified licens - ing grounds, and no ground existed to deal with dif - ficulties regarding frozen investments held in Russia and sanctioned investors on registers. In November 2025, a new sanctions reporting obligation was intro - duced, requiring any Cayman Islands person holding funds or economic resources owned, held or con - trolled by a Designated Person to file a frozen assets report with the Financial Reporting Authority annu - ally. In December 2025, the Sanctions (Miscellaneous Amendments) (Overseas Territories) Order 2025 came into force, amending the definition of “relevant firm” under various sanctions regimes to incorporate new categories including crypto-asset exchange provid - ers, custodian wallet providers, high-value dealers, art market participants, insolvency practitioners and letting agents, thereby increasing the scope of AML/ CTF compliance related to sanctions across the Brit - ish Overseas Territories. On 14 March 2024 a new divestment-specific licens - ing ground came into force, which may provide an opportunity for entities to apply for a specific licence to exit a frozen shareholder/LP and freeze the redemp - tion/withdrawal proceeds in a frozen bank account in a British Overseas Territory or the UK. Cayman Islands Country-By-Country Reporting The Tax Information Authority (International Tax Com - pliance) (Country-By-Country Reporting) Regulations (As Revised) (the “CbCR Regulations”) implement the OECD/G20’s Base Erosion and Profit Shifting Action 13 Report requirements and largely follow the OECD Model Legislation. The CbCR Regulations apply to any constituent entity (“Constituent Entity”) that is “resident in the Islands” and forms part of a multinational enterprise group (“MNE Group”). A Constituent Entity is resident if it is incorporated or established in the Cayman Islands,
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