The Cayman Islands Monetary Authority (the “Authority”) has advised that PART XA of the Anti-Money Laundering (Amendment) (No. 2) Regulations, 2020 (“AMLRs”), will commence effective 1 July 2022.
Part XA of the AMLRs sets out the identification and record-keeping requirements relating to transfers of virtual assets.
What is the Travel Rule?
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 traditional wire transfer;
- a virtual asset transfer between a VASP and another obliged entity; or
- 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”.
Part XA of the AMLRs contains definitions and provisions pertaining to the identification, verification, production, record-keeping and other relevant obligations relating to transfers of virtual assets including the Travel Rule requirements for VASPs. These are set out fully in the annex attached hereto but in summary they require an originating VASP to collect and record the following information when conducting a virtual asset transfer:
- the name of the originator (the person who placed the order or who owned the asset prior to the transfer) and the beneficiary (the person who will own the asset on completion of the transfer);
- the account numbers of the originator and the beneficiary, where an account is used to process the VA transfer;
- the address of the originator, the number of a government-issued document evidencing the originator's identity, customer identification number or date and place of birth; and
- where an account is not used to process the transfer, the unique transaction reference (UTR) which permits the traceability of the transaction.
Both the originating VASP and the beneficiary VASP must keep records of the complete originator and beneficiary information for each virtual asset transfer for at least 5 years.
What to do next?
Given that Part XA of the AMLRs will be effective from 1 July 2022, all VASPs registered or in the process of registering with the Authority are required to advise the Authority on how they will comply with the Travel Rule related provisions as outlined in the AMLRs, by submitting details of their compliance arrangements, including the relevant policies and procedures and the use of resources (including technological tools) by 31 March 2022.
Please contact is immediately if these new requirements apply to you so that we can assist you to make this deadline with all the reporting requirements.
See full legal update with details on Part XA - Identification and Record-Keeping Requirements Relating to Transfers of Virtual Assets