Section 25 of the Banks and Trust Companies Act (2021 Revision) and Intertrust Corporate Services (Cayman) Ltd and Cayman Islands Monetary Authority

• Jurisdiction: Cayman Islands
• Judge: Mr Justice Segal
• Judgment Date: 30 September 2021
• Court: Grand Court (Cayman Islands)
• Docket Number: CAUSE NO. FSD 169 OF 2021 (NSJ)

In the Matter of Section 25 of the Banks and Trust Companies Act (2021 Revision)

And in the Matter of Intertrust Corporate Services (Cayman) Limited

And in the Matter of Cayman Islands Monetary Authority

Before:

The Hon. Mr Justice Segal

CAUSE NO. FSD 169 OF 2021 (NSJ)

IN THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

Appearances:

Colin McKie QC of CDM Chambers instructed by Guy Manning, James Austin-Smith, and Jeremy Durston of Campbells for the Appellant

Ms Gemma Lardner, Rachael Reynolds, Farrah Sbaiti and Max Galt of Ogier for the Authority

Introduction

1 Intertrust Corporate Services (Cayman) Limited (the Appellant) is a substantial provider of financial services in the Cayman Islands (it provides corporate, fiduciary, and related services to a large number of companies, partnerships, and trusts). For that purpose, its activities are licensed (the Licence) pursuant to the Banks and Trust Companies Act (2021 Revision) ( BTCA). The respondent is the Cayman Islands Monetary Authority ( Authority), the regulator of the Appellant's licensed activities.

2 By notice to the Appellant dated 13 May 2021 ( Decision Notice) the Authority, pursuant to section 18(1)(vi) of the BTCA, gave notice that it had imposed various requirements ( Requirements) with respect to the Appellant's Licence. The Requirements required the Appellant to take certain action before the expiry of various deadlines imposed by the Authority as set out in the Decision Notice.

3 Pursuant to section 25(2) of the BTCA, where the Authority makes a decision requiring a licensee to take certain steps pursuant to section 18 of the BTCA, the licensee is given the right to appeal against the decision on motion. Section 25(2) of the BTCA is in the following terms:

“An appeal against the decision of the Authority shall be on motion. The appellant within twenty-one days after the day on which the Authority has given its decision shall serve a notice in writing signed by the appellant or the appellant's attorney-at-law on the Authority of the appellant's intention to appeal and of the general ground of the appellant's appeal:

Provided that any person aggrieved by a decision of the Authority may, upon notice to the Authority, apply to the Court for leave to extend the time within which the notice of appeal prescribed by this section may be served and the Court upon hearing of such application may extend the time prescribed by this section as it deems fit.”

4 On 17 June 2021, the Appellant issued a notice of originating motion (the Notice of Motion) seeking a declaration that the whole decision of the Authority to issue the Decision Notice and to impose the Requirements was unreasonable and/or unlawful and an order that the Decision Notice be reversed or alternatively varied or modified by the Court or remitted to the Authority with appropriate directions from the Court. The Notice of Motion also sought a stay of the Requirements. An appendix to the Notice of Motion set out the general ground of the Appellant's appeal.

5 On 24 June 2021, the Appellant issued a summons seeking an order that “ the time limited for the Appellant to serve a notice of its intention to appeal as well as its general ground of appeal … be retrospectively extended until 17 June 2021” (the Leave Application). This was required because the 21-day period referred to in section 25(2) had expired on 3 June 2021. In support of the Leave Application, the Appellant filed and relied on the First Affidavit of Mr Daniel Rewalt ( Rewalt 1) and the First Affidavit of Mr Daniel Jaffe ( Jaffe 1). Mr Rewalt is one of the two co-managing directors of the Appellant and Mr Jaffe is employed by the Appellant and holds the title of Managing Director of the Americas and the Rest of the World.

6 The Authority opposed the Leave Application. It submitted that (a) the Court had no jurisdiction to grant an extension of time where the application for an extension was made after the expiry of the 21-day period (the Jurisdiction Point) and that (b) even if the Court did have jurisdiction, it should not grant the extension sought in the circumstances of this case (the Discretion Point). The Authority filed and relied on the First Affidavit of Mr Rohan Bromfield ( Bromfield 1) and the Second Affidavit of Mr Bromfield ( Bromfield 2).

7 The Leave Application was heard on 5 August 2021. The Appellant was represented at the hearing by Mr Colin McKie QC and Campbells while the Authority was represented by Ms Gemma Lardner of Ogier. During the hearing, an issue arose as to whether certain terms used in the Decision Notice (the reference in the paragraph numbered 1 under action to “ full Risk Assessments”) had a defined or technical meaning by reference to related regulatory guidance or regulations and I directed that the parties file brief further submissions dealing with this issue. These submissions and further materials were received on 12 August and on 13 August I wrote to the parties (in an email forwarded by my Personal Assistant) in the following terms and setting out my decision:

“At the hearing last Thursday, I indicated to the parties that I would aim to let them have my decision on the Appellant's application as soon as I could but that, because I have to be away for the remainder of August, the reasons for my decision, with a written judgment, would need to follow thereafter.

After having received last night and been able to review today the notes filed by Campbells and Ogier on the meaning of “full Risk Assessments” in paragraph 1 of the Decision Notice, I am now able to set out my decision on the two main issues raised by the application, namely (a) whether the Court has jurisdiction and the power under section 25(2) of the Banks and Trust Companies Act (2021 Revision) ( BTCA) to grant an extension of time to a licensee wishing to appeal a decision of the Authority to which that section applies where and even if the notice in writing of the intention to appeal is served after the expiry of the twenty one day period (the Jurisdiction Issue) and (b) whether, assuming that jurisdiction exists, the extension of time sought by the Appellant in this case should be granted (the Discretion Issue).

I have decided, after carefully considering the submissions and evidence filed by the parties, to grant the Application and that (i) as regards the Jurisdiction Issue, the Court does have jurisdiction and the power to grant an application for leave to extend the time for service of the notice of appeal even where the application for leave is only made and served after the expiry of the twenty one day period and (ii) as regards the Discretion Issue, on balance, the time period within which the Appellant is required, for the purposes of section 25(2) of the BTCA, to serve a notice of its intention to appeal and of the general ground of appeal, be extended to and treated as 17 June 2021. I consider, however, that leave should only be granted on the basis that the Appellant is liable for and should pay the Authority's costs of and arising from the Application on the standard basis, to be taxed if not agreed (I appreciate that I have not heard submissions as to costs but my decision that the Authority's costs be paid is based on my conclusion that such an order is needed to avoid the Authority being prejudiced to an unjustifiable extend by the granting of the extension of time).

I shall provide a judgment setting out my reasons in due course (at some point and as soon as possible during September). In the meantime, I would request Campbells and Ogier to prepare a suitable form of order for my approval and to seek to agree (within the next 14 days) directions for the further conduct of the appeal(s). If agreement cannot be reached, then each firm should file at the end of that period a draft of the directions they propose with a brief statement of their position on any issues in dispute. I would expect the proceedings to be expedited and to proceed promptly. I confirm that I would be available on 8–10 November for a hearing if those dates would be appropriate and convenient to the parties (I would also be available during the week commencing 18 October but assume that this would be too soon).”

8 This judgment now sets out the reasons for that decision.

The background – the Decision Notice and the Fine Notice

9 The Decision Notice was in the following terms:

“ TAKE NOTICE:

The Cayman Islands Monetary Authority of Six Cricket Square, P.O. Box 10052, Grand Cayman KY1–1001, Cayman Islands, has taken the following action.

ACTION:

Pursuant to section 18(1)(vi) of the Banks and Trust Companies Act (2021 Revision) (the “Act”), the Authority hereby imposes the following requirements with respect to the Company's Trust Licence:

• 1. The Company shall conduct and document full Risk Assessments on all clients within six (6) months of this Decision Notice;

• 2. The Company shall ensure all missing documentation such as Nature and Purpose of the Business Relationship, and client due diligence/know your customer information for high risk rated clients is collected within nine (9) months of this Decision Notice; and for medium and low risk rated clients within twelve (12) months1 of this Decision Notice;

• 3. The Company shall ensure Source of Wealth and/or Funds is collected and documented for high risk rated clients within nine (9) months of this Decision Notice; and for medium risk and low risk rated clients within twelve (12) months of this Decision Notice;

• 4. To the satisfaction of the Authority, the Company shall hire additional resources in order to remediate and maintain the Authority's requirements.

REASONS:

Given the breaches of the Anti- Money Laundering Regulations (2020 Revision) (as amended) (the “AMLRs”) as identified in the Company's inspection conducted in February 2020, which relate to serious...