Cayman has yet again approved several amendments to its anti-money laundering rules following the Caribbean Financial Action Task Force's negative reviews.
The jurisdiction has now explicitly explained the concept of virtual assets for anti-money laundering purposes.
The bill defines virtual assets as a "digital representation of value that can be digitally traded or transferred, and can be used for payment or investment purposes".
It considers financial services related to the sale, transfer or administration of virtual assets, such as cryptocurrencies like bitcoin, to be relevant financial business that is subject to anti-money laundering laws and regulations. This applies also to token sales and initial coin offerings.
The government is also working on drafting an appropriate legislative framework for virtual assets.
Under the proposed changes, the Anti-Corruption Commission will be made a member of the Anti-Money Laundering Steering Group as well as the Interagency Coordination Committee. They will also allow the jurisdiction to bring countermeasures against countries that are blacklisted by the FATF and treat them as high-risk countries.
The recent amendments follow a report by the Caribbean Financial Action Task Force (CFATF) that highlighted flaws in Cayman's anti-money laundering and counter-terrorism financing regimes.
Attorney General Samuel Bulgin said that some of the report findings have had no basis.
"We have expressed to the world our continuing commitment to ensure that the financial services industry in the Cayman Islands does not provide any safe harbour for those who are involved in any sort of illicit activity, but it is difficult to keep up with these international standards if for no other reason than the fact that the rules change midstream," he said.
Cayman suffers from this "magnified representation" which "gives the entirely wrong impression", Bulgin added.