CAYMAN ISLANDS Law and Practice Contributed by: Jason Ta, Gemma Walters, Paul Walters and Ben Magahy, Travers Thorp Alberga
to advise the licensee on the proper conduct of its affairs, (vi) applying to the Grand Court of the Cay - man Islands for orders directing the winding up of the relevant entity, and (vii) the imposition of administra - tive fines. There have been a number of enforcement actions in the recent past, including: • cancellation of the registration of two individual directors in accordance with Section 6 (2) of the Directors’ Registration and Licensing Act for failure to provide information and pay licensing fees; • cancellation of the registration of a company as a Securities-Registered Person in accordance with Section 17 (2A)(a) of SIBA for failing to provide information, give declarations, pay fees and to have qualifying directors; • revocation of the banking licence of a company in accordance with Section 18 (5)(b) of the Banks and Trust Companies Act for entering into provisional liquidation; and cancellation of a mutual fund reg - istration pursuant to Section 30 (3)(a) of the Mutual Funds Act for failing to submit audited accounts for four consecutive years and failing to pay annual fees for two consecutive years; • levying of administrative fines on regulated entities for AML infractions and failure to maintain pre - scribed capital; and • cancellation of the virtual asset service provider registration held by an entity where CIMA had rea - sonable grounds to believe that: (a) the registrant was carrying on business fraudu - lently or otherwise in a manner detrimental to the public interest, to the interest of its clients or to the interest of its creditors; (b) the registrant had contravened the VASP Act and AML regulations; (c) the registrant has not conducted the direction and management of its business in a fit and proper manner; and (d) the registrant’s majority shareholder was not a fit and proper person. 2.11 Implications of Additional, Non-
• Anti-Money Laundering Regulations – an entity that conducts “relevant financial business” must comply with the AML/CFT regime in the Cayman Islands. Recent amendments to the regime in 2020 brought virtual asset service providers into scope. • Data Protection Act – the Data Protection Act requires a data controller to comply with eight data protection principles when processing personal data and to ensure that those principles are com - plied with in relation to personal data processed on the data controller’s behalf under a written contract. In addition, the Data Protection Act also deals with data security, data breaches and the rights of individual data subjects, including provid - ing a privacy notice. • Cybersecurity – CIMA has published its Rule and Statement of Guidance relating to Cybersecurity for Entities Regulated by the Authority requiring regulated entities to develop, implement and moni - tor robust cybersecurity frameworks. These regula - tions aim to reduce the threat of cyber-attacks, protect sensitive data, and enhance recovery from cybersecurity incidents. • Social media – the use of social media and similar tools is currently not specifically regulated, apart from indirectly under legislation such as the Data Protection Act, the Penal Code and the Contracts Act. 2.12 Review of Industry Participants by Parties Other Than Regulators Under the VASP Act, every licensee (and every regis - tered person who is so directed by CIMA) is required to have its accounts audited annually (or at such other times as CIMA may require) by an auditor who is a chartered accountant, certified public accountant or other professionally qualified accountant approved by CIMA. While certain fintech businesses may not be carrying out “relevant financial business” (see 2.11 Implica- tions of Additional, Non-Financial Services Regula- tions ) they may nevertheless choose to apply certain AML/CFT provisions to their business as a matter of best commercial practice, although there is no regula - tory oversight of such voluntary measures operated by unregulated entities.
Financial Services Regulations Key areas include the following.
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