The Cayman Islands government has recently passed new framework, addressing the treatment of virtual assets, and AML, within the nation.
This framework, which was first put forth in early May of 2020, is comprised of 5 bills; each of which has the goal of facilitating a transparent, and safe, environment for market participants. Finance Minister, Tara Rivers, noted the following points, elaborating on the goals of this framework.
- Innovate financial services
- Provide regulatory clarity
- Protect consumers
- Comply with FATF recommendations
By passing this framework, the Cayman Islands have put a good foot forward in their treatment surrounding virtual assets.
Found within this new framework are two notable highlights.
- The Virtual Asset Service Provider Law
- Under this newly passed law, virtual asset service providers (VASP) must register with the Cayman Islands Monetary Authority (CIMA)
- Regulatory Sandbox
- This ‘sandbox’ is essentially a program which allows for companies to test/prove the viability of new products and services, without the need for full licensing.
When commenting on the purpose of these bills, Finance Minister, Tara Rivers, indicated that one of the reasons behind this move is to attract ‘legitimate businesses’.
Cayman Islands has long been noted as a tax haven nation. Due to friendly regulations surrounding taxation, businesses world-wide seek to ‘set-up-shop’ in the tiny Caribbean nation.
While this may have been the case at one point in time, regulators have been working hard to change this narrative/perception. This new framework is just one such example, as it is structured to enforce compliance with international AML practices; in doing so, it is hoped that criminal activity, which often makes use of new technologies, will be abated.
With a population of roughly 65,000 people, Cayman Islands is one of the larger island nations found in the Caribbean.
On island, multiple regulatory bodies work together to ensure companies employ safe practices. Two of these, which had a hand in the passing of this new framework, include:
- The Caribbean Financial Action Task Force
- The Cayman Islands Monetary Authority (CIMA)
In Other News
While a newly established sandbox within Cayman Islands is a good thing, they are not the first to take the leap in establishing such a program. We recently took a look at another sandbox program, established by industry leading, Vertalo. While the former is overseen by government regulators, the latter offers similar benefits; the ability to test out services in a low-risk environment.