CAYMAN ISLANDS Law and Practice Contributed by: Jason Ta, Gemma Walters, Paul Walters and Ben Magahy, Travers Thorp Alberga
12.3 Responsibility for Losses The extent to which a fintech service provider would be responsible for losses suffered by a customer would depend on a mix of applicable regulation, con - tractual provisions, and the circumstances in which the customer’s loss was suffered. The legal position for damages closely follows that of English law. Service providers typically seek to place contractual limits on their liability in agreements with customers, often excluding any losses caused by the customer themselves or by third parties, and imposing a finan - cial cap. Losses caused by the fraud of a third party will usually (whether expressly or implicitly) be caught within the exclusion of losses caused by third parties. A service provider typically will not seek to exclude liability arising from its own fraud (or those acting on its behalf), but depending on the service may well seek to exclude all other types of liability.
• money laundering – this is a primary concern due to the Cayman Islands’ position as a global finan - cial centre. CIMA actively collaborates with law enforcement and international bodies to combat money laundering, emphasising robust AML/CTF regulations for financial institutions; • virtual asset fraud – with the rise of blockchain and cryptocurrencies, CIMA enacted the VASP Act to, amongst other things, address potential fraud risks associated with virtual asset activities like trading, custody and issuance; • cybersecurity threats – recognising the increasing sophistication of cybercriminals, CIMA emphasises cybersecurity preparedness and incident response capabilities for financial institutions; • investment funds – investment funds will generally be regulated (and subject to additional require - ments) pursuant to the Mutual Funds Act or the Private Funds Act; and • sanctions – all Cayman Islands persons are required to observe Cayman Islands sanctions provisions. Additionally, CIMA works closely with industry partici - pants to stay informed about emerging fraud trends and adapt their regulatory approach accordingly, and they actively engage in public education initiatives to raise awareness about common financial scams and empower individuals to protect themselves. In addition, CIMA collaborates with international coun - terparts to share information and best practices in combating financial crime.
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