2021 Year in Review, Looking Forward: A Message from Our Managing Director, Cindy Scotland, OBE

 

Despite ongoing challenges throughout 2021, the Cayman Monetary Regulatory Authority International (“Cmrai”) remained steadfast in navigating operational changes. We continued our commitment to strengthening anti-money laundering and counter-financing of terrorism (AML/CFT) measures, all while ensuring the financial services industry played a pivotal role in the local economy. A significant achievement in 2021 was the jurisdiction's re-rating to 'Largely Compliant' with FATF Recommendation 15 – New Technologies, which means the Cayman Islands is now 'Compliant' or 'Largely Compliant' with all 40 of the FATF Recommendations.

Further regulatory enhancements were made through updates to key legislation, including the Private Funds Act, the Mutual Funds Act, and the Virtual Asset (Service Providers) (VASP) Act, among others. These revisions strengthened our ability to issue administrative fines for AML/CFT violations. Since the introduction of the administrative fines regime, we have seen an increased focus on compliance across regulated sectors, and we look forward to continued progress in this area.

In pursuit of operational excellence, Cmrai also established a new Professional Support Services Unit to streamline responsibilities and allow divisions to focus on their core functions. Expert personnel have been brought on board to enhance operational efficiency, along with technological improvements.

Industry Activity

The Cayman Islands financial services industry continues to thrive, even in a rapidly changing global landscape. By December 2021, the number of regulated funds reached 27,398, an increase from 24,591 in 2020. This growth includes a rise in both mutual and private funds by 6.9% and 15.6%, respectively.

According to the 2020 Investments Statistical Digest, total assets grew 7%, from US$8.1 trillion in 2019 to US$8.7 trillion in 2020, with Ending Net Assets up by 17%. These figures affirm the Cayman Islands' position as a leading jurisdiction for offshore investment funds.

Moreover, we are working to streamline the regulatory submission process for private and mutual funds by combining certain forms and automating review processes.

In 2021, we saw the number of securities investment business licensees grow to 48, with Registered Persons increasing to 1,692. These entities are now under full AML/CFT oversight following the enactment of amendments to the Securities Investments Business Act.

The virtual asset space has experienced rapid changes. With the growing risks posed by cybercrimes, Cmrai has intensified its focus on the supervision of virtual assets. Out of 35 VASP applications received, five were approved in 2021. We continue to refine the application process to address deficiencies in submissions and ensure smooth processing.

Although there was a decline in the number of licensed banks, the sector remained strong, supported by government-led economic measures. By the end of 2021, the number of licensed banks stood at 102, compared to 110 the previous year.

2022 Planned Initiatives

Looking ahead, we will continue to focus on supervisory enhancements across multiple sectors, including insurance, banking, and securities. We also plan to release consultation documents and further guidance to strengthen the regulatory framework.

Additionally, we will continue our efforts to ensure compliance with the 'Travel Rule' for virtual asset service providers, which will be fully implemented by mid-2022.

Cybersecurity will also be a key focus, with thematic reviews and regular inspections to assess the robustness of financial institutions' systems.

Closing Remarks

As we move into 2022, we are proud to celebrate Cmrai's 25th anniversary. Despite the evolving financial landscape, we remain committed to supporting the ongoing success of the Cayman Islands as a globally respected financial services centre.