According to the press release dated October 31, an autonomous British Overseas Territory in the Caribbean, the Cayman Islands, is building a regulatory framework for virtual asset service providers (VASPs).
The Ministry of Financial Services of the Cayman Islands Government building a regulatory framework for VASPs
The Ministry of Financial Services of the Cayman Islands Government states:
“The move had strengthened the country’s ability to regulate and attract persons and entities that deal with virtual assets as a business.”
Currently, “Phase One” of the framework is underway. It will also determine how the Caymans will regulate and enforce an anti-money laundering (AML) and counter the financing of terrorism (CFT) measures. The new framework incorporates updated recommendations that the Financial Action Task Force adopted in 2019.
At the time, these recommendations included a controversial travel rule, which required VASP to collect and share personal data about the creator and payee of the transaction. Existing VASPs and new market entrants will need to register with the Cayman Islands Monetary Authority to demonstrate their compliance with global AML/CFT standards.
The VASP framework will be submitted for review before the CFATF reassessment in November. The results of the FATF evaluation are expected by the end of Q1 2021.
Phase One also comes as the Cayman Islands is being assessed by the Financial Action Task Force and the Caribbean Financial Action Task Force on its efforts to combat proliferation financing (CPF), funding weapons of mass destruction. The new rules aim to align companies in the jurisdiction with the CFP, AML, and CFT rules.
The second phase of the framework implementation will include careful licensing and oversight requirements and is expected to come into effect in June 2021. Last month, the Cayman Islands were removed from the list. The EU’s tax has ns, and it looks like they are making a serious effort to improve their image in the financial world.
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