Cayman Islands Launches Regulations For Virtual Asset Service Providers

Cayman Islands launches regulations for virtual asset service providers. The Ministry of Financial Services of the Government of the Cayman Islands has reported that a regulatory process for providers of virtual asset services, or VASPs, has begun.

In an Oct. 31 press release, the ministry claimed that the move had strengthened the country’s “ability to regulate and attract persons and entities that deal with virtual assets as a business.” The first phase of implementation, already in progress, focuses on compliance with and enforcement of the laws on anti-money laundering and combating the funding of terrorism.

The current structure implements the revised guidelines that were implemented in 2019 by the Financial Action Task Force. These recommendations included a controversial ‘travel law’ requiring the collection and exchange of personal data by VASPs on the originator and beneficiary of the transactions.

Existing VASPs and newcomers to the market will need to register with the Cayman Islands Monetary Authority in order to demonstrate their compliance with global AML/CFT standards. Cayman’s AML/CFT regime is currently under review by both the FATF and the Caribbean Financial Action Task Force following a recent Mutual Evaluation Report.

The VASP framework will be submitted for consideration prior to the CFATF re-rating, due in November. The findings of the FATF review are expected by the end of Q1 2021. The second phase of the framework implementation will include “licensing requirements and prudential supervision,” and is expected to come into force in June 2021.

Last month the Cayman Islands was removed from the EU’s tax haven blacklist and would appear to be making serious efforts to improve its image in financial circles.

[image: William Duggan]

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