Maples wins court case against Cayman’s Monetary Authority

(CMR) The Grand Court has ruled in favor of the Maples Group in a landmark judicial review case challenging the legality of administrative requirements by the Cayman Islands Monetary Authority under new Anti-Money Laundering Regulations.

Maples challenged some of the findings of an inspection report by CIMA in 2020 regarding customer due diligence. CIMA had indicated that there were breaches of regulation 12(1)  of the AMLRs and/or the associated Requirement in relation to keeping due diligence documentation up to date.

However, Maples argued that some of the requirements would mean asking its clients for information unrelated to their business relationship.

In a judgment delivered on March 30, Hon. Justice Kawaley said Maples Corporate Service Limited is entitled to an order quashing some of these findings and requirements by the Monetary Authority, agreeing with Maples that the findings were unlawful and based on an erroneous construction of Regulation.

Maples Group also sought adjudication of the legality of the Monetary Authority’s administrative supervisory powers pursuant to which it carries out inspections and makes “requirements” of financial service providers, purportedly as a precursor to, rather than as a form of, enforcement action.

The review was sought against the background of the Cayman Islands being placed on the Financial Action Task Force (FATF) grey list, reportedly because the number of prosecutions and convictions do not match this jurisdiction’s risk profile.

However, The Hon. Justice Kawaley said in his judgment, “This international policy imperative has no bearing on the questions of statutory construction but is potentially a significant explanation and justification for CIMA adopting a rigorous stance in its approach to its supervisory functions and the present proceedings.”

The Ministry of Financial Services and Commerce acknowledged the Court's ruling on the judicial review, requested by the Maples Group, stating that “judicial reviews challenge the way in which decisions by public bodies have been made. They do not challenge the decisions themselves.”

The Ministry furthermore notes that the judicial review process demonstrates the Cayman Islands' respect for the rule of law; and that, in accord with the rule of law, CIMA is considering its options, including the option of appeal, in response to the ruling.

CIMA, in a release, said it stands committed to its robust regulation of the entire financial services industry in line with international standards and ensuring that Cayman Islands’ financial service providers and others are in compliance with the required rules and regulations.

To further this objective, CIMA  said it is currently reviewing the judgment along with its legal advisers and is considering all available options.