Two years have passed since the formation of the Russian Sanctions Task Force here in Cayman, otherwise known as Operation Hektor. Chaired by Director for the Financial Reporting Authority (FRA) RJ Berry, the task force began its work on 16 March 2022 and was created to coordinate, identify, and make policy amendments to implement sanctions on the Russian regime.

In February, prior to the 2nd anniversary of Russia’s illegal invasion on Ukraine, the Operation Hektor Tabletop Exercise took place with facilitators from the UK to discuss the operation’s successes, simulate scenarios and gather best practices to be shared with fellow British Overseas Territories.

The exercise was coordinated in partnership with the UK’s Foreign, Commonwealth & Development Office (FCDO), the Governor’s Office and the Cayman Islands Government. Approximately 24 representatives from cross-government entities participated in the 2-day exercise. Ian Bolton, Founder and CEO of Sanctions SOS and Ross Savage, a senior expert in financial crimes and Director of Grant Ropas Ltd. facilitated the exercise.

Bolton and Savage have been observing the management processes and successes of the Operation Hektor Task Force since its inception and are impressed with the Cayman Islands’ ability to successfully establish a multi-agency partnership, including the Governor’s Office.  This, they believe, is key to responding quickly to a rapidly changing landscape. “One of the key achievements is the coordinated approach and having all the relevant stakeholders around the table. That may seem simple, but in discussions with other jurisdictions that’s actually been problematic for some of them, so having the right people around the table, we were then able to start creating or recording relevant statistics regarding compliance reporting forms (CRFs) being filed, frozen assets, those types of things.” said Chair RJ Berry on the formation of the task force. 

Bolton and Savage have also provided guidance on the UK Sanctions and Anti-Money Laundering Act and how to comply with the recommended framework. Underscored by the UK government’s aim to enhance competitiveness while meeting international standards, Operation Hektor helps manage license applications, advises HE the Governor on the deregistration of Cayman-flagged vessels, and processes CRFs, which have reported frozen assets totalling US$8 billion.

“Sanctions are on an upward trajectory worldwide. Russia’s invasion of Ukraine saw a dramatic increase and that is the direction that will continue forward from here”, shared Mr. Bolton. He further explained that “sanctions are often used as a foreign policy tool to constrain or signal a change in behaviour, prevent the development of a particular type of programme, such as a nuclear programme, or coerce change in behaviour around things like human rights abuses.” 

Shortly after World War II, sanctions were developed by the United Nations. In more recent years, independent countries have implemented and managed their own sanctions, including sanctions against Russia, Iran and Myanmar. During 2022 and 2023, there have been twenty-two (22) amendments to The Russia (Sanctions) (EU Exit) Regulations 2019 and six (6) amendments to the Russia (Sanctions) (Overseas Territories) Order 2020 between 2020 and 2023. The development of sanctions has expanded from a focus on financial funds or resources to the use of goods, assets and migration of persons seeking employment in other jurisdictions. Examples of these sanctions or restrictions include the freezing of assets, travel bans, restricting transport resources, as well as restricting numerous professional and legal services. 

The Cayman Islands is the first stop on the sanctions management tour led by Bolton, Savage and the FCDO. Due to Cayman’s developed processes and achievements thus far, it was identified as an effective model for other overseas territories (OTs) to follow. A major factor in the operation’s success is the active cross-government approach and outreach with the private sector. Operation Hektor comprises members from 11 government departments/agencies and the Governor’s Office and meets monthly to discuss and review international news, reports, sanctions, and current data to support any policies and decisions made. 

HE the Governor Jane Owen met with the facilitators at the exercise’s completion. Following her meeting, she said she was “pleased that Cayman has been chosen as the pilot for this series of tabletop exercises which will now be rolled out across the other OTs to ensure that the Russia sanctions regime is robustly enforced. The exercise identified both risks and opportunities to ensure effective enforcement of the Russia sanctions regime in the future.” She also added that by the UK government’s support in funding the exercise and providing expert facilitators showed their commitment and partnership with the Overseas Territories. 

A key theme from the management of sanctions is that it is everyone’s business. In a continued commitment to sharing information on the governance of the Islands and the efforts made to safeguard the community, two educational videos on sanctions and Operation Hektor were produced which highlight the tabletop exercise and share information on how sanctions have developed and their current status. To view these videos, log on to CIGTV or visit the CI Government’s LinkedIn channel.

Task Force’s Structure:

• Financial Reporting Authority (Chair) 
• Cabinet Office (Secretariat)
• Office of the Governor
• Portfolio of Legal Affairs
• Ministry of Financial Services and Commerce
• Cayman Islands Monetary Authority
• Maritime Authority of the Cayman Islands
• Civil Aviation Authority of the Cayman Islands
• Cayman Islands Bureau of Financial Investigations (this is RCIPS arm of representation)
• Cayman Islands Customs and Border Control
• General Registry
• Lands and Survey Department

Operation Highlights:

The following are some key statistics on the Russia sanctions work that has been undertaken by the Cayman Islands as of June 2024: 

• 4 General Licenses (GL) have been issued by the Governor or Acting Governor, including the extension of one GL. 14 organisations have reported they are relying on the GLs 
• 42 Ongoing processing of license applications – thirty-seven (37) have been received since 1 March 2022 (22 received in 2022 and 13 in 2023) and two (2) received in 2024.
• 2 Cayman flagged vessels have been deregistered by direction of the Governor. In addition, over forty (40) vessels have been deregistered as they were unable to meet the requirements of the Merchant Shipping Act due to restrictions imposed by the Russia Sanction. A number of other vessels are under review for referral for deregistration.
• 7 helicopters and six (6) fixed wing aircrafts have been deregistered by the Cayman Islands Civil Aviation Authority, and a number of other aircrafts are still being monitored at this time.
• 1,319 CRFs – Continued review and processing of Compliance Reporting Forms (CRFs) related to the Russia Sanctions have been received since 1 March 2022; some of these forms identify funds that have been frozen: approximately USD8.35 billion and EUR 230 million and GBP 264,000.
• 211 Suspicious Activity Reports (SARs) filed since 1 March 2022.