Financial Crime World

Cayman Islands Issues Temporary Licenses for Innovative FinTech Services

The Cayman Islands Monetary Authority (CIMA) has introduced a new type of license that allows innovative financial technology (FinTech) service providers to operate in the country on a temporary basis. This move is designed to provide a controlled environment for FinTech companies to test and develop their services under CIMA’s supervision.

Temporary Licenses: Eligibility and Purpose

The new licenses will be issued in cases where:

  • The service being provided represents an innovative use of technology or uses an innovative method of delivery that requires additional supervision and oversight.
  • It is in the best interests of the public, regulated persons, or financial markets that the service be temporarily restricted or subject to specific requirements.
  • The service promotes technology or a method of delivery that may create a systemic risk to financial markets or the jurisdiction.
  • The service poses an Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT), and Combating the Proliferation of Weapons of Mass Destruction (CPF) risk that existing AML rules do not properly mitigate.

Sandbox Environment for FinTech Companies

The temporary license regime is designed to provide a sandbox environment for FinTech companies to test and develop their services, while also allowing CIMA to monitor and regulate the industry. The licenses will be subject to specific requirements and conditions, which will be outlined in the license agreement.

Consultation and Application Process

CIMA has already consulted with industry stakeholders on the introduction of the temporary license regime, and is now accepting applications from eligible FinTech service providers. The authority intends to process applications within 10 weeks of submission.

FinTech Hub in the Cayman Islands

The Cayman Islands continues to be a leading offshore hub for FinTech, with 18 virtual asset service providers currently registered under the country’s Virtual Asset Service Provider Act (VASP Act). CIMA has also committed to regular collaboration and cooperation with other international authorities in exchanging information, formulating global standards, and attending regulatory fora.

Flexible and Innovative Approach to Regulation

The temporary license regime is designed to provide a flexible and innovative approach to regulation, which will enable FinTech companies to develop new services and products that can benefit the financial sector.