FATF methodology could discriminate against Cayman


The methodology used by the Financial Action Task Force (FATF) in its peer review process has the potential to discriminate towards the Cayman Islands because the methodology is much more subjective than it was in the past.

That is the view of Gonzallo Jalles, chief executive of Cayman Finance, the organisation representing the financial services industry in the Cayman Islands. He was writing in the aftermath of a recent regional summit organised by the Caribbean Export Development Agency, in partnership with the Government of The Bahamas.

The event focused on financial services and how economies in the region can grow this sector. It included participation from several international bodies, including the FATF and the OECD. Cayman Finance represented the private sector in the Cayman Islands.

 “It was a good opportunity to interact with some of our peers and to compare notes – particularly, in the areas of upcoming regulations and changes that continue to put pressure in the financial industry globally,” Jalles said.

He noted that the methodology of the FATF peer review was explained in detail at the event. FATF conducts peer reviews of each member on an ongoing basis to assess levels of implementation of the FATF Recommendations.

“It is something to which all should pay close attention to, as it is not only going to generate additional costs that act as a barrier to entry, promoting the expected consolidation in the region, but has the potential to discriminate towards places like Cayman as the methodology is much more subjective than it was in the past,” Jalles said.

He noted a desire among some of the smaller centres in the region to work together to alleviate some of the growing costs instead of trying to cope with those individually but said he was sceptical about how practical this could be.

“It is unclear to me though how effective can that cooperation be when on a day-to-day basis we all compete for similar business, and we have made limited progress in cooperating in much simpler way, as, for example, the way we respond to media,” he said.

“It was also clear access to top-quality human capital is broadly recognised as key for this industry, and several countries showed concrete initiatives towards improving their education systems and aggressively relaxing immigration constrains of qualified professionals.

“Cayman, in my opinion, continues to be without doubt the best-positioned centre in the region and the undisputed leader.  It is up to each one of us (private practitioners, regulators, and legislators) to ensure we maintain that leadership.”

FATF, Cayman, Gonzallo Jalles, Cayman Finance, International, Caribbean Export Development Agency, Bahamas Government

Cayman Funds