Prepare for the Cayman Islands Monetary Authority’s (CIMA) anti-money laundering (AML) audit requirements

As of 18 September 2026, the following mandatory rules issued by The Cayman Islands Monetary Authority have come into effect:

• The Rule on Effective Compliance Programme for the Prevention and Detection of Money Laundering, Terrorist Financing and Proliferation Financing for Financial Services Providers (AML Rule), and
• The Rule on Compliance with Financial Sanctions and Targeted Financial Sanctions (Sanctions Rule).

A key development under these rules is the requirement for regulated investment funds to undergo independent AML audits. For fund managers and advisers, now is the time to assess the impact of the new rules, determine your AML audit requirements, appoint an independent auditor, and ensure your compliance frameworks are aligned with the new requirements.

Your key decisions should consider the following:

The rules set out expectations around the independence and qualifications of the persons performing the audits.

AML audits should be performed by suitably qualified persons who are independent from the design, implementation and/or operation of the policies, procedures, systems and controls that they audit. Such persons should also be free from any conflict of interest that could impair their objective judgment.

The rules also outline that an AML audit may be conducted by internal audit, external auditors, independent consultants, or other suitably qualified and competent independent parties. Additionally, CIMA has clarified that the AML Compliance Officer (AMLCO) is not considered sufficiently independent to perform the audit.

The new rules do not prescribe a specific frequency for AML audits. Instead, the frequency should be determined by the fund managers or advisers using a risk-based approach, taking into account factors such as the nature, size and complexity of the fund's activities, changes in its risk profile, and the effectiveness of its existing AML/CFT controls.

The basis for determining the audit frequency, including the underlying risk assessment and justification by funds, should be properly documented and made available to CIMA upon request.

The AML Rule expressly provides that AML audit reports must be submitted to CIMA as soon as practically possible following completion of the audit.

Regulated investment funds must also be ready to provide CIMA with the documentation of the independence of any person who performed the audit.

Whether you are evaluating your AML audit obligations, reviewing existing AML/CFT controls, or preparing for audit reporting requirements, we can support your compliance efforts through independent AML audits and AML/CFT control assessments, designed to meet CIMA requirements.

As the appointed outsourced internal audit and/or compliance service provider to over 120 licensed fund management companies in Singapore, we bring practical experience and technical knowledge supporting regulated entities. Also, we have experience conducting independent AML audits with reporting to CIMA. Through our close collaboration with PwC Cayman Islands, our approach reflects and understanding of and alignment to CIMA’s regulatory expectations and reporting requirements.