CAYMAN ISLANDS Law and Practice Contributed by: Jason Ta, Ben Magahy, Paul Walters and Gemma Walters, Travers Thorp Alberga
2.3 Compensation Models There are no restrictions in the Cayman Islands on the compensation models that industry par - ticipants are allowed to use to charge custom - ers. Compensation must be clearly disclosed to customers and not be charged in a manner that is misleading or deceptive. 2.4 Variations Between the Regulation of Fintech and Legacy Players The underlying regulatory regime for fintech industry participants is substantially the same as it is for legacy players. 2.5 Regulatory Sandbox The Cayman Islands offers a time-limited (up to one year) regulatory sandbox licence for both virtual asset service providers and fintech com - panies. This sandbox allows innovative servic - es to be tested with certain restrictions without requiring a full licence. The primary aim of the regulatory sandbox is to facilitate innovation in a safe and responsible manner. It allows com - panies to experiment with new products, ser - vices, solutions, technologies, business models and policies. By providing a controlled space for testing, it encourages creativity and the develop - ment of cutting-edge solutions. CIMA assesses, monitors and supervises the innovative service, technology or method of delivery of a sandbox licensee with a view to ensuring that: • the service, technology or method of deliv - ery complies with the principles of honesty, integrity, fair treatment of customers, and the protection of customer data and assets; • the service, technology or method of delivery improves the provision of financial services in the Cayman Islands; • the service, technology or method of deliv - ery complies with global standards and best
• FATCA and CRS Regulations (noting that the Cayman Islands also intends to implement the Crypto-Asset Reporting Framework); • Insurance Act; • International Tax Co-operation (Economic Substance) Act; • Mutual Funds Act; • Private Funds Act; • Proceeds of Crime Act; • Securities Investment Business Act (SIBA); and • Virtual Asset (Service Providers) Act (the “VASP Act” ). CIMA holds significant supervision powers with - in the financial services industry across a num - ber of key aspects. • Regulation and supervision – CIMA’s primary role is to regulate and supervise the finan - cial services sector in the Cayman Islands. It ensures compliance with relevant laws, regu - lations and international standards. • Monitoring compliance – CIMA monitors compliance with AML and CFT regulations. It oversees financial institutions’ adherence to these critical standards. • Currency management – CIMA manages the issuance and redemption of the Cayman Islands currency. It also oversees the man - agement of currency reserves. • Advisory role – CIMA provides advisory services to the Cayman Islands government on financial services regulatory matters. Its expertise informs policy decisions and regula - tory frameworks. • Regulatory measures – CIMA issues regulato - ry handbook measures in the form of policies, procedures, rules and statements of principle and guidance. These measures set detailed standards and give guidance to industry on compliance.
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