In episode 6 of AML Uncovered, we’re joined by James Smith of Harneys Global and Natalie Lazenby of Harneys Fiduciary to demystify key differences between the British Virgin Islands and the Cayman Islands for fund managers. From AML compliance roles to structuring fund vehicles and manager entities, they share practical guidance on how to choose the right jurisdiction—and what emerging managers need to know before launching offshore.
Topics covered include:
[00:54] Introduction to Harneys, a global offshore law firm with offices across Asia, the Americas, and Europe and an overview of Harneys Fiduciary's AML services and broader compliance offering, highlighting their commercial approach and global coverage from Cayman to BVI and beyond.
[03:21] The team explains how the Harneys x Passthrough collaboration began with Cayman AML managed services and has now expanded to include support in the BVI.
[04:37] James breaks down the key differences between Cayman and BVI for fund managers, including regulatory regimes, economic substance requirements, and structure options like the BVI’s “approved manager” regime. He shares when each jurisdiction makes more sense—especially for emerging managers or those launching smaller funds.
[14:04] Natalie dives into AML compliance expectations in both Cayman and BVI, covering the required officer roles (MLRO, AMLCO, DMLRO), the day-to-day responsibilities of each, and the distinct requirements for each jurisdiction. She highlights how Cayman and BVI handle due diligence documentation, risk analysis, and board-level accountability.
[21:27] This segment demystifies two commonly misunderstood AML frameworks: reliance (trusting a third party’s policies) vs. delegation (outsourcing while maintaining oversight). The guests explain the implications of each approach and how most investment funds operate under a reliance model—often with administrators handling customer due diligence (CDD).
[26:15] The conversation turns to practical issues fund managers face, particularly U.S.-based firms adapting to offshore compliance. Natalie and James discuss mismatches in global AML standards, the importance of understanding beneficial ownership thresholds (10% in Cayman vs. 25% elsewhere), and the growing expectation of continuous monitoring.
[39:10] James and Natalie emphasize the importance of selecting the right jurisdiction and understanding the compliance obligations upfront. They encourage fund managers to evaluate both BVI and Cayman when launching offshore structures.
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