Beginning 31 October 2020, all New Market Entrants, Pre-Existing Service Providers, and Other Authorized Entities will be required to complete the VASP Application Form via the Authority’s REEFS platform. These entities will also be required to complete an AML/CFT form, which will be available on REEFS. If entities do not have access to REEFS, they may email vaspinfo@cima.ky.

REEFS is the Authority’s online portal for electronic submission of required financial services information to the Authority as well as providing payments information where applicable. Industry users are able to communicate electronically with the Authority by: submitting financial return filings, filing new applications (licences and registrations), submitting change requests to existing licence/registration information already on file and viewing payments information regarding outstanding fees and payment history. REEFS accounts are provided to local service providers (registered offices, law firms, auditors etc.) and licensees.

All New Market Entrants and Pre-Existing Service Providers wishing to provide virtual asset services will be required to register in phase one. This includes entities engaged in virtual asset custodial services or in the operation of virtual asset trading platforms. In a later phase, the licensing regime will commence, and these entities will be required to apply for a license. However, the initial registration process will not immediately result in additional requirements for virtual asset custodians or virtual asset trading platforms but rather will apply VASP Law and SIX, Cricket Square P.O. Box 10052 Grand Cayman KY1–1001, Cayman Islands Tel +1 345 949-7089 www.cima.ky regulation requirements in a phased manner. The additional licensing requirements will begin in phase two.

In phase one, registration is not required for Other Authorized Entities; however, they will have to provide notification of their current or proposed virtual asset services by completing the VASP Application Form via the REEFS platform. The form to be completed is the same as that applicable to registration applicants; however, information already provided to the Authority through their existing authorization will not be required to be resubmitted. Other Authorized Entities will also be required to complete an AML/CFT form which will be available on the Authority’s REEFS platform.

The VASP Law will commence on 31 October 2020 and the VASP Application Form will be open via REEFS on that date. Entities engaging in virtual asset services on and after 1 February 2021, which are not registered or have not provided notification, will be subject to penalties and other enforcement measures. The VASP Application Form window will begin on 31 October 2020. In order to ensure that registrations are completed before 1 February 2021, the Authority encourages applications to be submitted by 12 December 2020.

Importantly, entities engaging in virtual asset services on or after 1 February 2021, that are not registered or have not notified the Authority, will be in breach of the VASP Law. Such entities may be subject to penalties and other enforcement measures from the Authority, including to cease and desist providing virtual asset services.

Yes. Entities currently providing virtual asset services can continue to provide such services if they complete the VASP Application Form and are registered or have notified the Authority by 31 January 2021. However, they must cease providing virtual asset services if they are not registered by 31 January 2021 or they have not notified the Authority.

Entities not providing virtual asset services as of 31 October 2020 cannot do so until their application for registration has been approved or the requisite notification made.

All applications for registration must be accompanied by a KYD 1,000.00 assessment fee. This fee can be paid via the REEFS portal at the time of application submission. There will also be an assessment fee payable by registrants on approval of an application for registration. The Authority will provide further details with respect to the application fee during the application process. SIX, Cricket Square P.O. Box 10052 Grand Cayman KY1–1001, Cayman Islands Tel +1 345 949-7089 www.cima.ky

In addition to the VASP Law, all entities providing virtual asset services are required to comply with AML/CFT/CPF and Sanctions obligations including requirements under the Anti-Money Laundering Regulations (2020 Revision) and the Authority’s Guidance Notes (Amendment) (No. 5): Virtual Asset Service Providers, February 2020. A Statement of Principles for entities providing virtual asset services, to be issued by the Authority in due course, will also be applicable to all VASPs. The objective of the Statement of Principles is to provide a broad framework and guidance for the conduct of virtual asset activities in or from the Cayman Islands. The Statement of Principles will establish general standards by which all entities providing virtual asset services should conduct their business, and will be used as a measure against which the Authority will assess compliance for AML/CFT and prudential purposes, while the full VASP framework is developed and consulted on by the Authority.

As some VASPs may engage in multiple business lines, those other different business lines may also require licensing or registration under other regulatory laws (as is consistent with current practice).

Over the coming months, the Authority will further develop its framework for entities providing virtual asset services. This will include rules, procedures and guidance tailored to each entity type. In accordance with its usual practice, the Authority will engage in a fulsome consultation process on this framework and will seek feedback from the public.

• A comprehensive full group companies structure chart, including the ultimate beneficial owners
• Details of regulated status of entities within the group the relevant regulated services and jurisdictions
• Details of services provided by any related entity to the VASP

• Certified copies of academic and professional qualification certificates
• Police Clearance certificate or affidavit of no criminal convictions
• A fully completed Personal Questionnaire found here
• Two character references
• One financial reference
• An updated and comprehensive CV
• A notarised or similarly certified colour copy of Government issued photo ID
• Completed Declaration of Source of Funds/ Source of Wealth form found here with supporting evidence for major shareholders

To ensure that there are no undue delays in the due diligence process, VASPs must ensure that they follow the Regulatory Procedure – Assessing Fitness and Propriety.

• REEFS Application Form (APP-101-84 and AIR-157-84)
• List of the applicant’s blockchain addresses (per coin)
• Details of all shareholders with more than 10% shareholding together with a completed CIMA personal questionnaire
• Information on Chief Information Officer/Chief Information Security Officer, including CV
• Copies of cybersecurity policies (follow CIMA’s guidance on cybersecurity)
• Copies of AML/CFT policies (in line with the Anti-Money Laundering Regulations and Guidance Notes)
• Comprehensive Business Plan
• Transaction flow charts
• Details of outsourced arrangements and related agreements
• Applicable Fee of CI$1,000 (US$1,219.50) + assessment fee to be determine at approval

All documentation and payment of the application fee must be submitted to CIMA for the processing of the application to commence. The documentation required for the registration/licensing of a VASP is outlined on the applicable REEFS forms together with a comprehensive business plan and transaction flow charts.

A comprehensive business plan should clearly outline the following, at a minimum:

• A description of the business being undertaken or to be conducted
• Products and services being offered or to be offered in the future and details on the process of how those services are being offered
• Standalone financial statements covering two years and financial projections
• Physical location of operations
• Customer base (e.g. number of customers, geography/jurisdiction)
• Delivery channels and marketing plan/strategy
• Corporate governance e.g. composition of board of directors, senior management and any committees
• Staff complement and organizational chart showing reporting lines 
• Information about contracts with affiliates and outsourcing arrangements, where applicable and details on whether they are regulated in any jurisdictions

Financial Action Task Force (“FATF”) Recommendation 16 prescribes that originating VASPs must obtain and hold required and accurate originator information and required beneficiary information on virtual asset transfers. These requirements apply to VASPs whenever their transactions (in fiat currency or virtual assets) involve:

1. a traditional wire transfer
2. a virtual asset transfer between a VASP and another obliged entity, or
3. a virtual asset transfer between a VASP and a non-obliged entity

The application of the FATF’s wire transfer requirements in the virtual asset context is known as the “Travel Rule”. 

Part XA of the Anti-Money Laundering Regulations contains definitions and provisions pertaining to the identification, verification, production, record-keeping and other relevant obligations relating to virtual assets including the Travel Rule requirements for VASPs.

Part XA of the Anti-Money Laundering Regulations will be effective from 1 July 2022.

All VASPs registered or in the process of registering with CIMA were required to advise how they will comply with the Travel Rule related provisions as outlined in the Anti-Money Laudnering Regulations, by submitting details of their compliance arrangements, including the relevant policies and procedures and the use of resources (including technological tools) to vaspinfo@cima.ky by 31 March 2022.

All new applicants for VASP registrations/licences are required to indicate in their applications how they will comply with the Travel Rule related provisions as part of their compliance arrangements. This information should be included as an attachment when submitting their policies pertaining to anti-money laundering and counter terrorist financing via the REEFs application, APP 101-84 (Schedule E).