Government Moves to Prepare for FATF Assessment and Drive Financial Sector Innovation

Signalling a re-energised and coordinated drive to strengthen regulatory resilience and support innovation in the financial services sector, the Cayman Islands Government on Wednesday published two important legislative bills designed to ensure Cayman’s readiness for the upcoming Financial Action Task Force (FATF) 5th Round Mutual Evaluation of the jurisdiction’s anti-money laundering, counter-financing of terrorism, and counter-proliferation financing (AML/CFT/CPF) framework and to further modernise the jurisdiction's virtual asset regime.

The Churches Incorporation (Amendment) Bill, 2025 and the Virtual Asset (Service Providers) (Amendment) Bill, 2025 represent strategic enhancements to key elements of Cayman’s AML/CFT/CPF regime and regulatory framework. These reforms are part of a broader legislative agenda under the Ministry of Financial Services and Commerce to align the Cayman Islands with evolving global expectations, while positioning the jurisdiction for long-term competitiveness.

“This Government is taking focused, decisive action to safeguard Cayman’s global standing and prepare rigorously for the 5th Round FATF assessment in 2027. At the same time, we are making commercial enhancements to sustain and attract innovation and investment in our financial services industry,” said the Premier and Minister for Financial Services, the Hon. André Ebanks.

The amendment to the Churches Incorporation Act addresses a long-identified compliance issue. It ensures that churches registered as Non-Profit Organisations are fully aligned with the registration and governance requirements of the Non-Profit Organisation Act. By explicitly affirming the non-profit nature of their activities in law, the Bill enhances transparency, mitigates financial crime risks, and demonstrates the jurisdiction’s commitment to best practice regulation in line with FATF standards.

Extensive consultation with leaders from affected churches was undertaken to develop a collaborative and proportionate solution. In addition to compliance improvements, the Bill introduces modernised governance provisions that reflect current realities and support good stewardship.

The Virtual Asset Service Providers Amendment Bill aims to clarify the treatment of tokenised investment funds, where traditional equity or investment interests are digitally represented on a blockchain.

The Premier noted that this growing segment of the financial market holds significant promise, but will benefit from legislative clarity to continue to operate within Cayman’s virtual asset regime. These amendments reflect Cayman’s agility in responding to global fintech developments and reinforces its appeal as a destination for cutting-edge investment products.

The Premier went on to say that these Bills are only the first in a series of planned legislative enhancements under a government that is committed to high performance and demonstrating financial integrity and international credibility. Additional reforms are being developed this year to support the FATF assessment and strengthen compliance frameworks across the jurisdiction. At the same time, new commercial enhancements aimed at sustaining Cayman’s global attractiveness as an international financial centre are also underway.