The notorious tax haven appears to be cleaning up its anti-money laundering and anti-terrorist financing performance ahead of a FATF review.

The Cayman Islands Government’s Ministry of Financial Services announced that it has initiated a regulatory framework for virtual asset service providers, or VASPs.

In a press release on 31 October, the ministry said the measure had strengthened the country’s „ability to regulate and attract individuals and entities dealing with virtual assets as business“.

The first phase of the implementation, which is already underway, focuses on compliance and enforcement of anti-money laundering and anti-terrorist financing regulations.

The new framework incorporates the updated recommendations approved by the Financial Action Task Force in 2019.

As reported by Crypto Bank at the time, these recommendations included the controversial „travel rule“, which requires value-added service providers to collect and share personal data on the originator and beneficiary of transactions.

Existing value-added service providers and new market entrants must register with the Cayman Islands Monetary Authority in order to demonstrate compliance with global anti-money laundering and anti-terrorist financing standards.

The Cayman Islands AML/CFT regime is currently under review by both the FATF and the Caribbean Financial Action Task Force following a recent Mutual Evaluation Report.

The VASP framework will be submitted for consideration prior to the CFATF requalification scheduled for November. The results of the FATF review are expected to be released by the end of the first quarter of 2021.

The second phase of the implementation of the framework will include „licensing and prudential supervision requirements“ and is expected to come into effect in June 2021.

The Cayman Islands was removed from the European Union’s tax haven blacklist last month and appears to be making serious efforts to improve its image in financial circles.