Since the enactment of the Monetary Authority (Administrative Fines) (Amendment) Regulations (2022 Revision) (the “Fines Regulations”),1 the Cayman Islands has witnessed a continuous increase in the number of administrative fines handed down by the Cayman Islands Monetary Authority (the “Authority”). The Authority, in its role as financial sector regulator for the Cayman Islands, is responsible for supervising the financial services of the Islands and for exercising the enforcement powers granted to it by the regulatory acts and regulations. The expansion of the Authority’s enforcement power has become a wakeup call to all persons regulated under the regulatory laws in the Cayman Islands, which include banks and trust companies, insurers/reinsurers/insurance managers/brokers and their clients, securities licensees and registered persons, investment funds, fund administrators and virtual asset providers among many more.
The Authority, acting as a powerful watchdog over the regulation and supervision of financial services within the Cayman Islands, has shown its teeth in the level of fines that it has imposed, the largest of which was in excess of KYD$4 million.2 From a local and international perspective, the role of the Authority demonstrates that the Cayman Islands has a high level of regulation and a careful regulatory watchdog that is actively engaged in protecting the integrity of its regulatory space. With the potential for serious consequences to breaches of the every growing regulatory landscape, it is important that all persons (entities and individuals) regulated under these laws understand their obligations.
Breach and Fine Notices
Part VIA of the Monetary Authority Act (2020 Revision) as amended (the “Monetary Authority Act”) allows the Authority to impose administrative fines upon individuals and entities in respect of breaches of provisions set out in Schedule 1 of the Fines Regulations.3 The administrative fines regime is comprised of the Monetary Authority Act and the Fines Regulations.4 Breaches are categorised as being minor, serious or very serious. The Authority has a period of six months from the time it becomes aware of a minor breach, and two years from the time it becomes aware of a serious or a very serious breach, to impose a fine.5 There is a sliding scale of fines from KYD$5,000 for minor breaches to KYD$100,000 for individuals and KYD$1 million for entities for very serious breaches.
1The Fines Regulations in 2020 as amended expanded the power of the Authority to impose administrative fines upon individuals and entities licensed and regulated in the Cayman Islands in respect of breaches of the provisions as set out in Schedule 1 of the Fines Regulations.
2Public Notice 13 May 2021, the Authority fined Intertrust Corporate Services (Cayman) Limited (“Intertrust”) KYD$4,232,607.50 see
https://www.cima.ky/administrative-fine-intertrust-corporate-services-cayman-limited.Pursuant to a Consent Order filed 10 October 2022 (FSD 0158 of 2021), Intertrust will pay the full amount of the fine and a contribution to the Authority’s legal costs totaling KYD$767,392.50, resulting in a KYD$5,000,000 settlement payment to the Authority.
3 Schedule 1 of the Fines Regulations lists the “prescribed provisions” and “breach categories” in respect of which administrative fines can be levied.
4 See also Enforcement Manual (2018), Enforcement Manual (Procedure for Administering Admin Fines) (2019).
5 The limitation periods run from the date on which the Authority became aware of the commission of the relevant breach. The Authority will be deemed to have become aware of a breach when it first received information from which the breach can be reasonably inferred.
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