According to the 2019 World Investment Report published by the United Nations Conference on Trade and Development (UNCTAD), foreign direct investment (FDI) inflows into Cayman reached US$57.3 billion in 2018, up from US$25.5 billion the previous year.
Lloyds Bank notes that total FDI stock in the territory as standing at US$525 billion in 2018.
The banking group states, “The Cayman Islands is the most intensive offshore financial centre in the world, with foreign assets estimated to represent 1,500 times the size of its domestic economy.”
Most investments are concentrated in the financial sector, making the country the eighth biggest banking centre in the world.
It is perhaps only natural that crypto investors have begun to look at the country.
However, the local authorities are warning crypto services that they must follow strict anti-money laundering rules.
“Persons engaged in virtual asset services in or from within the Islands are therefore reminded that they are subject to, and are required to comply fully with…all other applicable laws.”– The Ministry of Financial Services
The jurisdiction is set to implement the global AML standards for crypto assets set out by the Financial Action Task Force.
The Ministry of Financial Services has issued a statement indicating that the Cayman government is preparing a legislative framework to enable compliance of virtual asset service providers with these international measures.
“Persons engaged in virtual asset services in or from within the Islands are therefore reminded that they are subject to, and are required to comply fully with, the provisions of the AMLRs and all other applicable laws,” the statement said.
“Virtual asset service providers are therefore obligated to take preventative measures under the AMLRs, including customer due diligence,” it added.
Services in connection with virtual assets, such as cryptocurrencies like bitcoin, already have to conduct customer due diligence under Cayman law.
The research site international investment.net notes that recent FATF recommendations about the regulation and supervision of virtual assets and the provision of virtual asset services urge countries and obliged entities to comply with its recommendations to prevent misuse of virtual assets (VAs) for ML and terrorist financing.
FATF’s wants to reduce and eventually eliminate money laundering conducted through cryptocurrencies.
They are pushing for national legislation in each territory which amends the treatment of virtual assets to take account of criminal uses of cryptocurrencies.
The guidance calls for subjecting crypto-service providers to supervision and monitoring by competent national authorities, without relying on self-regulatory bodies.