The Cayman Islands is an overseas territory of the United Kingdom. The legal system is similar to English legal system with the majority of local legislation being passed to reflect changes in legislation in the English legal system.There are three tiers of court: The Summary Court, The Grand Court and the Court of Appeal.
The Summary Court deals with offences which are triable summarily and the proceedings are presided over by a Magistrate. In addition the Summary Court has the jurisdiction to hear cases in which the offence involves drugs. Appeals from the Summary Court are heard by a Judge in the Grand Court; the Grand Court is a Court of Original Jurisdiction. Appeals from the Grand Court lie to the Court of Appeal. Prosecutions are brought in the name of the Crown; this usually follows upon an investigation by the Royal Cayman Islands Police Service, the Customs Department, Immigration Department and/or other investigative agencies.
Cayman has become one of the leading financial centres in the world with a large number of institutional international assets being booked through Cayman Islands banks. In June 2005 transaction volumes were such that the Cayman Islands was classified as the fifth largest international banking centre in the world and also claims ownership of the majority of the world's hedge funds.
With the rise in international narcotics trafficking, the Cayman Government entered into the Narcotics Agreement of 1984 and the Mutual Legal Assistance Treaty of 1986 with the United States in order to reduce the use of its facilities for money laundering operations.
This treaty formally governs the procedure for which assistance is granted for all US based requests for assistance. Requests are submitted to the Chief Justice which administers all requests and communications associated with this legislation. For requests for assistance for countries other than the United States the Criminal Justice (International Cooperation) Law 2004 applies. The Attorney General is the Central Authority under the Criminal Justice (International Cooperation) Law 2004 for all information requests from external bodies and the Chief Justice is the primary authority under the Mutual Legal Assistance Treaty 1986 for all requests dealt with in regards to the United States of America. The Cayman Islands has become proficient in providing assistance within domestic law and ensuring compliance with international regulation and obligations.
In June 2000, The Cayman Islands was listed by multilateral organizations as a tax haven and a non-cooperative territory in fighting money laundering. The country's swift response in enacting laws limiting banking secrecy, introducing requirements for customer identification and record keeping, and for banks to cooperate with foreign investigators led to its removal from the list of non-cooperative territories in June 2001.
The major sources of illegal proceeds within the Cayman Islands are fraud and drug trafficking; such proceeds are invariably spent rather than laundered. The major foreign predicate crime source of illegal proceeds is serious fraud. Money launderers mostly target banks and terrorist financing is a minor generator of SARs.
As the Cayman Islands does primarily follow the United Kingdom in the legislation it enacts, the primary pieces of legislation that can be called upon for asset recovery is The Proceeds of Crime Law 2008 which follows closely upon the UK legislation of the same name. This law gives effect to the primary tools that can be utilised in asset recovery cases including restraint, confiscation and forfeiture orders.
Additional legislation that is relevant to the processes of asset recovery includes:
