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Intertrust fined $4.2M over AML failings


(CNS): One of Cayman’s leading corporate service firms has been fined more than CI$4.2 million for breaches of anti-money laundering regulations. CIMA said the fine was imposed because of the company’s “pervasive and protracted history of non-compliance” with AML rules and its failure to remediate the breaches. CIMA said Intertrust had failed to verify the sources of funds, get documentary evidence on the nature of their clients’ business, identify beneficial ownership, accurately consider risk or properly monitor clients.

In a public notice posted on its website Thursday that revealed the whopping fine, CIMA said the sanction was imposed following a recent on-site inspection and after similar failings had been identified during previous visits. The regulator also implied that this was a warning to other firms as it would ensure compliance with the enhanced regulatory regime.

In an email circulated to clients in the wake of the publicly disclosed fine, Intertrust said it would appeal. It said the fine had been imposed in regard “to aspects of our client due diligence and know your client (KYC) records”, and that CIMA had increased the scrutiny on local service providers after Cayman wound up on the Financial Action Task Force (FATF) grey list.

“The administrative fine we have received relates to historical remediation plans we had already been working with CIMA to address by putting enhanced local customer due diligence and KYC measures in place,” MD Daniel Jaffe said in the email. “As part of our next steps we will be working with our Counsel and following an appeals process in response to the fine so we can reach a balanced conclusion.”

The news that Intertrust is facing such a large fine comes after Maples revealed that it intends to seek a judicial review regarding how the regulator is applying the new more stringent regulations on its business.

One of the main reasons that Cayman was grey-listed was due to a lack of enforcement and reluctance to pursue prosecutions against those in the financial services sector. CIMA, which has historically been accused of reticence when it comes to scrutiny of the offshore sector, appears to be upping its game.

In the notice regarding the Intertrust fine, the regulator said it was important that firms had the necessary policies in place and complied with regulation to prevent Cayman-based entities being used as conduits for financial crime. CIMA said it would be vigilant in its enforcement of the AML rules.

Meanwhile, Jaffe claimed Intertrust was “absolutely committed to… ensuring that we continue to maintain the highest standards of compliance with the Cayman Islands stringent regulatory framework through our important role as gatekeeper.”