The EU removes Cayman Islands from its anti-money laundering blacklist

What's happened?

We reported last October that Cayman had been removed from the Financial Action Task Force's (FATF) Grey List of jurisdictions subject to increased monitoring in relation to anti-money laundering (AML) and countering the financing of terrorism (CFT), to which it had been added in March 2022.

As a consequence of this move, on 18 January 2024, the EU updated its own 'blacklist' of high risk third countries for AML/CTF purposes and - as expected - Cayman has been removed from that, too. (Strictly speaking, the new Delegated Regulation doesn't take effect until early February.)

Does this matter?

Yes.

Not only is it good reputationally - after all, 'blacklist' and 'high risk' aren't terms any jurisdiction would want to be associated with - but removal clears the way for Cayman funds to continue to be marketed within the EU under Article 36 or Article 42 of the AIFMD, once the recently agreed amendments to the AIFMD (AIFMD 2.0) start to apply - likely to be in H1 2026, as things stand.

Currently (and among other requirements),

• if an EU AIFM wants to market a non-EU AIF - such as a Cayman fund - into the EU (Article 36) or

• if a non-EU AIFM wants to market any AIF into the EU (Article 42)

making use of national private placement regimes, the jurisdiction where the AIF is established must not be included on FATF's list of Non-Cooperative Countries and Territories.

When the amendments to AIFMD come into effect, this will be changed - it will only be possible to market non-EU AIFs in the EU if (among other things) the AIF's jurisdiction is not on

• the EU's AML blacklist or
• its separate blacklist of non-cooperative tax jurisdictions.

(Note that Cayman was removed from the EU tax blacklist in October 2020 - see our report here.)

So, Cayman funds will remain capable of being marketed in the EU even when AIFMD 2.0 comes into play.