A culture of ever-changing compliance

Part II:

A culture of compliance

Global Compliance Solutions recently held a series of anti-money laundering workshops over two days aimed at polishing up the skills of management, administrative staff, compliance officers and MLROs alike.  Business Editor Lindsey Turnbull was in attendance and reports in this first of a series of articles.
The world of compliance is ever-changing and always evolving as new legislation, regulations and guidance notes appear to be issued on a regular basis. What was sufficient knowledge for an organisation that falls under compliance and money laundering legislation a year ago may be outdated now.
Simply keeping up with all the new information is also insufficient; that knowledge must be imparted to all staff members.
The skill of a successful MLRO or CO is to provide that information in as clear a mode as possible, so that absolutely everyone in an organisation is completely familiar with the drill (and the possible consequences should procedures not be properly adhered to), should the reporting of an issue relating to compliance or money laundering have to take place.  
Stuart Carson, a barrister from the UK, runs Strategic Business Compliance and was the invited guest presenter during the two day’s worth of sessions and he shared his considerable expertise in international regulatory, compliance and anti-money laundering requirements with attendees to the workshops.
Karen O’Brien, managing director of Global Compliance Solutions, gives some background to the design of the workshops: “We aimed to assist those working in the financial services sector to understand the obligations and appreciate the part they can play in preventing their organisation being used by money launderers.  In today’s regulatory environment it is the senior management teams that determine the success of the compliance programme. The workshop explained the role of senior management in developing a compliant culture, the risks they face and how to effectively manage those risks.”
According to Carson, the purpose of his presentation was to have those COs and MLROs present thinking carefully about their own AML regimes and to provide them with some food-for-thought as to how they could be improved.
“I want you to think about whether your organisation has really achieved compliance,” he said.
Carson began by exploring why in particular the workshops were being held at this particular time.
“The implementation of revised money laundering regulations and the Proceeds of Crime Law 2008 means significant changes and key regulatory requirements,” he explained. “In particular, training of staff members in this regard is not an option, it is a requirement.”
In some AML regimes the specific responsibilities of MLROs is clearly specified, however in Cayman’s case this is not so, according to Carson. He therefore urged attendees to carefully go through regulations to ensure that all management responsibilities were being properly met, including those relating to training of staff.
“MLROs and COs have basically three levels of information with which they must operate: The Proceeds of Crime Law (2008) provides current criminal offences and penalties for non-compliance; the Money Laundering Regulations (2008) provide standards to comply with and the Guidance Notes issued by the Cayman Islands Monetary Authority give day-to-day compliance requirements,” Carson explained.
In particular, Regulation 5 of the Money Laundering Regulations (2009) ought to be of considerable interest to MLROs and COs, according to Carson, because it states quite specifically that training in recognising and handling transactions that might be money laundering must be given “from time to time”.   
The maximum penalty for non compliance with the POCL is 14 years imprisonment, and even though he acknowledged that this penalty was reserved for the real money launderers, Carson urged his audience to fully acquaint themselves with what is required of them and ensure that they pass that knowledge on to their company’s directors, management and staff.
The real issue
Under Part 5, Section 133 of the POCL (2008) it is a criminal offence for any person to conceal, disguise, convert, transfer or remove criminal property from the islands. Failing to disclose information that they believe could be criminal conduct, which includes money laundering and terrorist financing, is also a criminal offence, as is tipping off the suspected criminal.
Carson said that it is not common for an individual in Cayman to deliberately commit the former crime of concealing, etc, criminal property, but failing to disclose or tipping off are two areas that should be paid particular attention, he said.
“This aspect of the Law creates money laundering offences not just for money launderers but for regulated entities and staff as well,” he explained. “They are going after what are termed ‘smurfs’ or those who assist in the crime.”
Crucially, the Courts are obliged, under section 136 (5) of the POCL (2008) to take into account whether the individual concerned has followed any guidance issued by the CIMA.  Likewise, section 137 (1) of the POCL (2008) makes it a criminal offence for any nominated officer (reporting officer) who fails to disclose and Courts will take into consideration whether the reporting officer followed Guidance Notes (section 137 (4)).
The sentence can be imprisonment if the Guidance Notes are not followed.
“Basically those in the financial services industry have been brought into the arena to assist law enforcement authorities to find the criminals,” Carson stated.


Karen O’Brien and Stuart Carson.