CAYMAN ISLANDS Law and Practice Contributed by: Jason Ta, Ben Magahy, Paul Walters and Gemma Walters, Travers Thorp Alberga
and other common law jurisdictions and gener - ally include: • dishonesty – fraud requires a dishonest act or representation. The defendant must intention - ally deceive another party, leading to a false belief or action; • false representation or concealment – the defendant makes a false representation (oral or written) or conceals material information. The representation can be about facts, inten - tions or future events; • intent to cause gain or loss – the defendant acts with the intent to (i) gain something (eg, money, property, advantage); or (ii) cause loss to another party (eg, financial harm, depriva - tion); • reliance by the victim – the victim relies on the false representation or concealment; • their reliance leads to a detrimental conse - quence (eg, financial loss); • causation – the defendant’s fraudulent act directly causes the victim’s loss or harm; • materiality – the false representation or con - cealment must be material – meaning it sig - nificantly affects the victim’s decision-making process; • knowledge or recklessness – the defendant must either knowingly make the false rep - resentation or act recklessly (ie, not caring whether it is true or false); and • civil and criminal aspects – common law fraud can lead to both civil (compensation, restitution) and criminal (penalties, imprison - ment) consequences. As an example, Section 255(1) of the Penal Code provides that a person who dishonestly, with a view to gain for themselves or another or with intent to cause loss to another (a) destroys, defaces, conceals or falsifies any account or any record or document made or required for any
accounting purpose; or (b) in furnishing informa - tion for any purpose, produces or makes use of any account, or any such record or document as aforesaid, which to that person’s knowledge is or may be misleading, false or deceptive in a material particular, commits an offence and is liable to imprisonment for seven years. In addition, knowingly or wilfully supplying false or misleading information to the Cayman Islands Tax Information Authority (TIA) is an offence. 12.2 Areas of Regulatory Focus While CIMA does not publicly rank specific types of fraud in order of priority, there are several are - as where it has demonstrably focused its efforts: • money laundering – this is a primary concern due to the Cayman Islands’ position as a global financial centre. CIMA actively collabo - rates with law enforcement and international bodies to combat money laundering, empha - sising robust AML/CTF regulations for finan - cial institutions; • virtual asset fraud – with the rise of block - chain and cryptocurrencies, CIMA enacted the VASP Act to address potential fraud risks associated with virtual asset activities like trading, custody and issuance; • cybersecurity threats – recognising the increasing sophistication of cybercriminals, CIMA emphasises cybersecurity prepared - ness and incident response capabilities for financial institutions; • investment funds - investment funds will gen - erally be regulated (and subject to additional requirements) pursuant to the Mutual Funds Act or the Private Funds Act; and • sanctions – all Cayman Islands persons are required to observe Cayman Islands sanc - tions provisions.
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