Below is the Cayman Islands Government's response to the FATF Report, released on 22 June, 2000, by Government of the Cayman Islands.

The Government of the Cayman Islands expressed its astonishment today at being listed by the Financial Action Task Force (FATF) as a "non-cooperative" jurisdiction in the international fight against money laundering. The designation is entirely contradictory with efforts made by the Cayman Islands in the global fight against money laundering. Moreover, the decision was made without due process, and is inconsistent with reports made by FATF as late as last week. "We were assured by FATF that 'the review process would be fair and transparent throughout' in their letter outlining the process," said Hon. George McCarthy, Financial Secretary of the Cayman Islands and former President of the Caribbean Financial Action Task Force (CFATF). Repeated requests that FATF conduct an on-site evaluation of Cayman's anti-money laundering system, including one sent June 16th to Joseph Myers, Chairman of the FATF Review Group for the Americas and a U.S. Treasury Department official, were disregarded, as were requests to be given adequate time to respond to aspects of the FATF report (which was not agreed upon by the Cayman Islands). Contained in FATF's own summary report of June 22nd was the statement that the Cayman Islands "has been a leader in developing anti-money laundering programs throughout the Caribbean region. It has served as president of the CFATF, and it has provided substantial assistance to neighboring states in the region. It has demonstrated exemplary cooperation on law enforcement matters, and uncovered several serious cases of fraud and money laundering otherwise unknown to authorities in FATF member states. In addition, it has closed several financial institutions on the basis of concerns about money laundering." The FATF inclusion of the Cayman Islands on its list is further inconsistent with recent developments with the OECD, which has just designated the Cayman Islands as a "cooperative" jurisdiction. Many of the same elements involved in securing this designation, such as transparency and effective exchange of information, are directly related to a successful anti-money laundering system. "While no one can claim to be perfect, we are entitled to be accorded reasonable opportunity to make our case and to consider the validity of any concerns which FATF may harbour," added McCarthy. "This week's outcome with the OECD demonstrates what can be achieved with constructive engagement -- and it is disappointing that FATF has elected to take the opposite approach." Despite recognition and commendation of the Cayman Islands, FATF appears to have concentrated on a highly technical aspect of its judgment criteria in making its pronouncement. The June 22nd report states, for instance, that "although the Cayman Islands has criminalised the laundering of the proceeds of all serious crimes and its system encourages reporting of suspicious transactions (by providing a safe harbor from criminal liability for those who report), it lacks a mandatory regime for the reporting of suspicious transactions." "It is not simply a question of what is in the law, but what is in the practice of a jurisdiction that matters," said Minister Truman Bodden, leader of the Cayman Islands delegation. "Legal requirements may exist but not be enforced, whereas practice may be effective if backed by legal sanctions - as is the case here in the Cayman Islands." The Cayman Islands has a history of international cooperation, particularly on anti-money laundering issues. The Mutual Legal Assistance Treaty signed in 1986 (and ratified by the U.S. in 1990) has been successfully used over 170 times as a vehicle for exchange of information between the United States and the Cayman Islands. The U.S. State Department's 1998 International Narcotics Strategy Report noted that "the Cayman Islands remains diligent in its anti-money laundering efforts," and continued in this vein in the 1999 Report, observing that "it is essential that the Cayman Islands continues its diligence in regulating and enforcing its anti-money laundering program." The 1999 Report also stated, "the Cayman Islands' Proceeds of Criminal Conduct Law, which criminalised money laundering from all crimes was considered a monumental step when it was enacted in 1996." "We strongly support global efforts aimed at creating and enforcing the highest international standards of anti-money laundering measures, and our record shows this," stated McCarthy. "While FATF has appeared not to recognize sufficiently the contributions made by the Cayman Islands, we will continue to cooperate with organizations that do -- such as the OECD, the UN and others. As one of the leading financial centres, we are committed to maintaining a well-regulated financial services industry that reflects our determination not to tolerate criminal activity of any stripe." SOURCE Government of the Grand Caymans.

NOTE TO EDITORS:

The following is a list of Cayman Islands legislation through which international cooperation is rendered, particularly relating to money laundering issues.

1976 - Confidential Relationships (Preservation Law)
1978 - Evidence (Proceedings in Other Jurisdictions) Order
1984 - Narcotics Agreement with the U.S.
1986 - Mutual Legal Assistance (with the U.S.) Treaty - Ratified by the U.S. 1990
1986 - Misuse of Drugs Law (Money Laundering Amendment)
1988 - Misuse of Drugs Law (Money Laundering Amendment)
1990 - Misuse of Drugs Law (Cash Seizure at Port/Point of Entry)
1996 - Proceeds of Criminal Conduct Law
1997 - Misuse of Drugs (International Co-operation) Law
2000 - Code of Practice (Proceeds of Criminal Conduct Law)

CONTACT: Virginia Dixon of the Government of the Cayman Islands, 345-945-0943/ CO: Government of the Grand Caymans; Caribbean Financial Action Task Force ST: Grand Caymans IN: FIN