The Cayman Islands Government Financial Services Department announced the creation of a regulatory framework for Virtual Asset Providers, or VASPs.
In a press release issued on October 31, the ministry said the measure strengthened the country’s “ability to regulate and attract individuals and entities that deal with virtual assets as a business.”
The first phase of implementation, which has already started, is focused on compliance and enforcement of AML / CFT regulations.
The new concept includes updated recommendations adopted by the FATF in 2019.
As Cointelegraph reported at the time, these guidelines included controversial “travel rules” that required VASP to collect and share personal information about the sender and recipient of transactions.
Current VASPs and new entrants to the market must register with the Cayman Islands Foreign Exchange Office to demonstrate compliance with global standards for combating money laundering and terrorist financing.
The Cayman Islands AML / CFT system is currently being reviewed by both the Financial Action Task Force (FATF) and the Caribbean Financial Action Task Force following the recent mutual evaluation report.
The VASP structure will be sent for evaluation prior to the CFATF evaluation in November. The results of the Financial Action Task Force survey are expected to appear by the end of the first quarter of 2021.
The second phase of the concept will include “licensing and supervision requirements” and is expected to come into effect in June 2021.
The Cayman Islands was removed from the European Union’s blacklist of tax havens last month and it appears that it is making serious efforts to improve its image in financial circles.