This notice provides an update to the FAQs relating to the Virtual Asset Service Provider (“VASP”) registration process to assist industry with improving the completeness and quality of VASPs applications. The Cayman Islands Monetary Authority notes that incomplete or low quality applications are a cause of significant delays in the registration process. As such, see updated FAQs below. For a full list of VASP FAQs, click here.
A comprehensive business plan should clearly outline the following, at a minimum:
All documentation and payment must be submitted to the Authority before the processing of the application will 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. For more information, see REEFS FAQs.
To ensure that there are no undue delays in the due diligence process, VASPs must ensure thatthey follow the Regulatory Procedure – Assessing Fitness and Propriety
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: (a) a traditional wire transfer, (b) a virtual asset transfer between a VASP and another obliged entity or (c) 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. See Anti-Money Laundering (Amendment) (No. 2) Regulations, 2020.
Part XA of the Anti-Money Laundering Regulations will be effective from 1 July 2022.
How should VASPs initially report Travel Rule compliance to the Authority?
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 AMLRs, by submitting details of their compliance arrangements, including the relevant policies and procedures and the use of resources (including technological tools) to email@example.com 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).