Fighting Financial Crime
Published 24th November 2005, 1:38pm
George Town, Grand Cayman - 24 November 2005 - The Cayman Islands Government's commitment to prosecuting perpetrators and confiscating the proceeds of crime was reaffirmed recently with the sentencing of Mr Patrick Thomas Tibbetts for his role in an international money-laundering scheme.
Tibbetts was convicted of assisting Mr Richard Homa and Mr Michael Gause - both of the U.S. - engage in and benefit from criminal conduct using a "Ponzi" scheme known as Cash4Titles.1 More than 1,800 investors from the U.S. were defrauded out of approximately $517 million in Cash4Titles; both Homa and Gause were prosecuted in 2002 by the U.S. Securities and Exchange Commission (SEC) and are serving prison sentences.
Tibbetts, who was unsuccessful in his appeal against his conviction, is currently serving a three-year sentence at Her Majesty's Prison, Northward, in Grand Cayman.
"The conviction of Tibbetts is tangible evidence that our money-laundering laws will be vigorously enforced," said the Honourable Attorney General Samuel Bulgin.2 "Indeed, it is our hope that like-minded persons will be deterred from any such unwelcome activities in the Cayman Islands. They will not be tolerated."
Attorney General Bulgin added that the Crown will shortly be moving the Grand Court to start hearing the confiscation aspect of Tibbetts' sentencing with a view to assessing and forfeiting his benefits from money-laundering.
The Cayman Islands was the first regionally, and among the first worldwide, to criminalise the laundering of the proceeds of all serious crimes, extending such legislation beyond the ambit of drug-money laundering. The legislation gives the courts of the Cayman Islands power to restrain, and ultimately forfeit, the proceeds of drug trafficking and all other serious crime, including fraud.
A March 2005 assessment by the International Monetary Fund (IMF) recognised the Cayman Islands' anti money-laundering (AML) and combating of financing of terrorism (CFT) initiatives. "Efforts to achieve compliance with international standards have been top priority in the Cayman Islands... and there is an intense awareness of anti money-laundering and combating of financing of terrorism in the business community. The Cayman Islands authorities have devoted substantial attention and resources to improving the country's anti-money laundering, legal and institutional framework," noted the assessment team in the two-volume report.
The Cayman Islands maintains various institutions and authorities that work together to implement its AML/CFT regime. They include the Cayman Islands Monetary Authority (CIMA), the Financial Reporting Authority, the Financial Crime Unit of the Royal Cayman Islands Police and the Attorney General's Chambers.
Another important feature of Cayman's AML regime, recognised by the IMF, is the ability to provide mutual legal assistance to international law enforcement counterparts. Since signing a Mutual Legal Assistance Treaty (MLAT) with the U.S. in 1986, in excess of US$10 million arising from some 230 cases in which the two governments have cooperated, has been shared with the Cayman Islands. Several million dollars have also been returned to the U.S. for restitution to victims of fraud and other crimes.
In 2003, the Cayman Islands passed a comprehensive piece of anti-terrorism legislation in addition to adopting, as part of its domestic law, United Nations Security Council resolutions dealing with the financing of terrorism.
Looking forward, the Attorney General's Chambers is currently reviewing a draft bill, prepared late last year, which is proposing an even greater emphasis on forfeiture/confiscation, including civil forfeiture.
"Enhancing our existing legislation to include civil forfeiture is an important step forward," said Attorney General Bulgin. "It is my wish and certainly that of the entire Government that in order to continue to effectively combat money laundering, there needs to be greater vigilance in hitting the fraudsters and drug traffickers harder in their pockets, by confiscating their ill-begotten gains."
The Cayman Islands Government has been continuously working both domestically and internationally to maintain a strong regulatory and compliance framework. Domestically, this includes adherence to the Financial Action Task Force (FATF) international anti-money laundering standards. Internationally, this includes bilateral mutual co-operation arrangements, such as MLAT with the U.S., and various regulatory co-operation arrangements maintained by CIMA. The Monetary Authority Law (2003 Revision) vests CIMA with powers to make licensing, supervisory and enforcement decisions, and to co-operate with international regulatory authorities.
About the Cayman Islands Financial Services Industry
Building on more than 40 years of steady growth, the Cayman Islands today is recognised as a sophisticated, mature and diverse financial centre. Over the past 15 years in particular, the Cayman Islands has focused on two main objectives: building a world-class specialization of institutional business and developing strong international cooperation agreements with the U.S. and other countries. The Cayman Islands financial services industry encompasses banking, trust services, company services, mutual funds, insurance, vessel registration, capital markets products and the Cayman Islands Stock Exchange.
NOTES TO EDITORS
- The U.S.-based Cash4Titles plan involved lending money to borrowers who put up titles of their motor vehicles as security. By the time U.S. authorities closed the organisation in 1999, it had developed into a pyramid scheme in which old investors were being paid off with the money of new investors. Mr Tibbetts managed offshore companies formed by the Cash4Titles operators as conduits of the investment and the returns on it.
- A photo of Samuel Bulgin, QC, JP, the Honourable Attorney General, Cayman Islands, is available upon request.
For more information, please contact the Financial Services Secretariat at (345) 945-5819 or via email at email@example.com.