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Travel Rule requirements for VASPs

01 Mar 2022

On 22 February 2022, the Cayman Islands Monetary Authority (CIMA) announced that Part XA of the Anti-Money Laundering (Amendment) Regulations of the Cayman Islands (AMLRs), which sets out the identification and record-keeping requirements relating to transfers of virtual assets, will commence effective 1 July 2022.

Financial Action Task Force (FATF) Recommendation 16 prescribes that originating virtual asset service providers (VASPs) must obtain, and hold required and accurate originator information along with the 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”.

Given that Part XA of the AMLRs will be effective from 1 July 2022, all VASPs registered, or in the process of registering, with CIMA are required to advise CIMA on how they will comply with the Travel Rule related provisions as outlined in the AMLRs. Details of their compliance arrangements, including the relevant policies and procedures and the use of resources (including technological tools), must be submitted via email to vaspinfo@cima.ky by 31 March 2022.

Going forward, 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/Counter Terrorist Financing via the REEFs application, APP 101-84 (Schedule E).

A copy of the 22 February 2022 press release from CIMA can be found here.

Authors

Matt Taber Harneys front portrait image on a grey background
Kaneesa Ebanks Wilson Harneys front portrait image on a grey background
Marc Piano Harneys front portrait image on a grey background