Lawmakers in the Cayman Islands are advancing two bills aimed at updating the territory’s virtual asset regulations and anti-money laundering (AML) framework.
The legislative push comes as the jurisdiction prepares for a review by the Financial Action Task Force (FATF) in 2027.
Cayman Islands Premier and Minister for Financial Services André Ebanks said the government is taking “focused, decisive action to safeguard Cayman’s global standing and prepare rigorously for the fifth round FATF assessment in 2027.”
He added that the government is also making changes designed to “sustain and attract innovation and investment in our financial services industry.”
The Cayman Islands is also working toward “qualified jurisdiction” status from the US National Association of Insurance Commissioners (NAIC), a designation that would allow Cayman-based reinsurers to operate under reduced collateral requirements when conducting business with US insurers.
In 2023, the Cayman Islands was removed from the Caribbean Financial Action Task Force’s “grey list,” reflecting progress in meeting international AML standards. This removal is seen as a sign of the jurisdiction’s commitment to regulatory compliance and its ongoing efforts to address global concerns related to financial crime and transparency.
The Cayman Islands is recognized as the world’s second-largest domicile for captives and a key market for healthcare captives, group captives, catastrophe bonds, and international reinsurance.
One of the bills amends the Churches Incorporation Act to address compliance issues previously identified by regulators. The amendment requires churches to register as nonprofit organizations and comply with the governance requirements set out in the Nonprofits Organization Act.
According to industry group Cayman Finance, this step is intended to enhance transparency and mitigate risks related to financial crime.
Cayman Finance said the law’s affirmation of nonprofit status demonstrates the jurisdiction’s commitment to FATF standards. The group noted that these changes are designed to align local regulations with international expectations on AML and counter-terrorism financing.
The second bill focuses on virtual assets, clarifying the regulatory treatment of tokenized investment funds. These funds represent traditional equity and investment interests in a digital format on a blockchain.
Cayman Finance described this as a growing segment of the financial markets. Ebanks said the segment “has significant promise” and that the amendments will help the Cayman Islands respond to developments in financial technology.
The legislative package is part of a broader initiative. Ebanks stated that these measures are “just the first in a series of planned legislative actions,” with additional bills expected to be introduced to support the FATF assessment process.
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