The Cayman Islands Government has announced that the Virtual Asset (Service Providers) Law, 2020 (the “VASP Law“) will come into force in two phases.
Phase one, commencing on 31 October 2020, will focus on anti-money laundering (AML) and countering the financing of terrorism (CFT) compliance, supervision and enforcement.
Phase two, which will include licensing requirements and prudential supervision, is expected to come into force in June 2021.
Entities engaged in or wishing to engage in virtual asset services (“VASPs“) must now register with the Cayman Islands Monetary Authority (“CIMA“) under the VASP Law. VASPs that are currently subject to CIMA’s supervision under another regulatory law must notify CIMA (in the case of licensees) or register with CIMA (in the case of registrants) under the VASP Law.
Provisions of the VASP Law which relate to enforcement, penalties and offences will commence on 31 January 2021. Entities engaging in virtual asset services that have not registered with or notified CIMA by the applicable deadline (set out below) will be subject to penalties and other enforcement measures.
An application for registration or a notification being made under phase one will need to be submitted via CIMA’s Regulatory Enhanced Electronic Forms Submission (“REEFS“) online platform using the ‘VASP Application Form’ (together with a non-refundable assessment fee of CI$1,000 (US$1,220)). The ‘VASP Application Form’ requests, amongst other things, details of the nature of the entity’s virtual asset service(s), the entity’s Anti-Money Laundering Compliance Officer, Money Laundering Reporting Officer and Deputy Money Laundering Reporting Officer, the entity’s revenue for the prior 12 months (or if unavailable, projected revenue for the 12 months following the application), the entity’s AML/CFT/CPF procedures and the entity’s internal safeguards and data protection systems to protect the assets and data of clients.
As part of the registration or notification process, entities will also be required to complete an ‘AML/CFT Form’ which will need to be submitted through CIMA’s REEFS online portal.
If an application for registration is successful, the applicant will be required to pay an application fee of between CI$1,000 (US$1,220) and CI$15,000 (US$18,293) (the fee amount will depend on various prescribed factors). An annual renewal fee equal to the relevant application fee will also be payable.
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