Cayman’s regulatory framework is continuously evolving to ensure it meets the needs of market participants and their clients and investors.
Cayman has amended its anti-money laundering, terrorist financing, proliferation financing and financial sanctions requirements to ensure it remains in line with developing global standards, in particular those of the Financial Action Task Force (FATF).
In 2016, the Limited Liability Company was introduced at the request of US clients. In 2017, the Foundation Companies Act was introduced, which provides clients with a flexible vehicle for offshore structuring. In particular, the Foundation Companies Act has recently proved to be useful for emerging virtual asset businesses looking for corporate vehicles without traditional shareholders.
Following consultation with the OECD, the EU and Cayman Islands stakeholders, the Cayman Islands and other international financial centres adopted economic substance requirements in 2019. Cayman was assessed by the OECD as fully compliant. In 2020, the Cayman Islands amended the existing Mutual Funds Act and enacted a new Private Funds Act to provide a regulatory regime for smaller closed-ended investment funds. The Cayman Islands had already introduced legislative changes to allow the funds sector to participate in the EU’s Alternative Investment Fund Managers Directive.
Also in 2020, the Cayman Islands introduced the Virtual Assets (Service Providers) Act which sets out the legal and regulatory framework for virtual assets service providers seeking to do business in and from the Cayman Islands.