GEORGE TOWN, Cayman Islands (CNS) – The Cayman Islands’ ability to regulate and attract individuals and entities in the virtual assets market has been strengthened with the recent commencement of legislation for virtual asset service providers (VASPs) officials have said. They will also help Cayman comply with an important global review. A virtual asset is a digital representation of value that can be electronically traded and used for investment, such as cryptocurrency.
The new rules are expected to boost business in the sector by allowing the supervision of businesses providing services in the arena and help Cayman meet the latest recommendations from the Financial Action Task Force.
In a press release officials from the ministry of financial services said the regulatory framework for VASPs will commence in two phases. Phase one, which started this week, focuses on anti-money laundering and countering the financing of terrorism compliance, supervision and enforcement. Current VASPs and new entrants will need to notify and register with the Cayman Islands Monetary Authority (CIMA).
Phase two, which will include licensing requirements and prudential supervision, is expected to come into force in June 2021.
The Virtual Asset (Service Providers) (Amendment) Bill, 2020, which will introduce provisions to better facilitate the phased commencement approach, was published on Thursday, 29 October, and will be presented at the next sitting of the legislative assembly.
Cayman’s AML/CFT regime, along with the efforts to counter proliferation financing (CPF), is currently being assessed by the Caribbean Financial Action Task Force (CFATF) and the Financial Action Task Force (FATF) which sets the global AML/CFT/CPF standards.
The CFATF is the regional body that monitors compliance with the FATF standard. Cayman’s VASPs framework incorporates the FATF’s recommendations for AML/CFT/CPF, which the FATF adopted in 2019.
Phase one provides VASPs with the opportunity to demonstrate their compliance with global standards and its launch will be communicated to the CFATF for its consideration prior to the outcome of Cayman’s CFATF re-rating, which will be reported on at their November plenary, officials said.
The FATF review will be completed soon after and government anticipates that the task force will announce its findings by the end of this year. The CFATF’s re-rating evaluates the jurisdiction’s progress in addressing the FATF’s technical compliance concerns identified in Cayman’s Mutual Evaluation Report. The FATF review speaks to Cayman’s effectiveness in implementing the FATF recommendations.
