Category Archives: HSM Corporate Services

The Cayman Islands Government has confirmed that the jurisdiction will maintain its “legitimate interest” framework for access to beneficial ownership information, resisting external pressure for a fully public register. The Premier has publicly stated that a “Google-style” open-access register would likely be unconstitutional under Cayman law and has repeatedly referenced the ruling of the European Court of Justice which invalidated Luxembourg’s public register regime on privacy grounds. Instead, Cayman has adopted a “legitimate interest” test, permitting access to beneficial ownership data where a demonstrable public interest outweighs privacy concerns.

Amendments to the Beneficial Ownership Transparency Act were enacted in November 2025, with further changes approved by Parliament on 10 March 2026 through the Beneficial Ownership Transparency (Legitimate Interest Access) (Amendment) Regulations 2026. These introduced a KY$250 (US$300) annual fee for qualifying users conducting multiple searches and increased the cost of a single search to KY$75 (US$90).

The Cayman Islands beneficial ownership regime already exceeds current Financial Action Task Force standards, and the Cayman Islands Government continues to enhance all areas of compliance ahead of Cayman’s fifth-round mutual evaluation, scheduled for December 2027. The upcoming assessment is expected to focus on enforcement outcomes, including money laundering prosecutions, complaints handling and asset recovery.

Beneficial Owners

The overall objective of the beneficial ownership regime is to ensure transparency of the beneficial ownership of Cayman Islands entities. A Beneficial Owner in relation to a legal person means an individual who either (a) ultimately owns or controls, whether directly or indirectly, 25% or more of the shares, voting rights or partnership interests in a legal person; or (b) otherwise exercises ultimate effective control (through a chain of ownership or other than by direct control) over the management of the legal person; or (c), where there is no individual fitting within (a) or (b), an individual who exercises control of the legal person through other means (for example as a director or a CEO), but does not include an individual acting solely as a professional advisor or professional manager.

If no individual meets any of the criteria with respect to a legal person but the trustees of a trust meet one of the Beneficial Owner criteria, in their capacities as trustees of a trust, those trustees are then the beneficial owners of the legal person if they have ultimate effective control over the trust.

The meaning of ‘legal person’ includes partnerships (excluding foreign partnerships registered in the Cayman Islands) and extends to all companies (excluding foreign companies registered in the Cayman Islands); limited liability companies; foundation companies; limited partnerships; limited liability partnerships and exempted limited partnerships.

Conclusion

As a leader in ongoing anti-money laundering initiatives, the Cayman Islands continues to show its commitment to transparency and exceeding international standards.

HSM can assist with all beneficial ownership matters and provide the necessary advice as to the application of the beneficial ownership regime.

HSM Corporate Services Ltd. is pleased to announce that Trisha Peters has joined as a Corporate Services Manager.

Trisha joins HSM with over 20 years of legal and corporate experience in the Cayman Islands. She is well-versed in all aspects of corporate administration and registered office services, including company incorporations, voluntary liquidations, strike-offs, and statutory filings.

Trisha oversees entity formations, annual maintenance, due diligence, and regulatory reporting requirements. Her expertise spans key areas such as beneficial ownership, economic substance, and ongoing compliance with local regulations. She is also skilled in managing client relationships, ensuring the timely and efficient delivery of services tailored to their unique needs.

HSM Managing Partner, Huw Moses, OBE shares: “We are excited to have Trisha join our team with her strong track record working within the Cayman Islands legal framework. Having Trisha on our team will strengthen our commitment to delivering corporate excellence.”

In her role, Trisha will manage a team of administrators, offering mentorship, guidance, and strategic oversight. Her ability to navigate regulatory changes and streamline internal processes will contribute to enhanced operational efficiency across the board.

Further to the publication of the Beneficial Ownership Transparency Act, 2023, which came into force on 31 July 2024, the Cayman Islands Government is seeking comments on draft Beneficial Ownership Transparency (Legitimate Interest Access) Regulations, 2024 (the “LIA Regulations”) and draft Beneficial Ownership Transparency (Access Restriction) Regulations, 2024 (the “Access Restriction Regulations”). Once finalised, the new regulations, will allow members of the public to apply for beneficial ownership information subject, however, to legitimate interest requirements and/or restrictions in certain circumstances.

As anticipated, the LIA Regulations set out the framework for members of the public, who can evidence a legitimate interest, access to beneficial ownership information for a specific legal person, subject to a two part test.

A member of the public (the “Applicant”) may apply for access to information in relation to a legal person on the basis that the Applicant is:

a person engaged in journalism or bona fide academic research;
acting on behalf of a civil society organisation whose purpose includes the prevention or combating of money-laundering, its predicate offences or terrorism financing; or
seeking information in the context of a potential or actual business relationship or transaction with the legal person about whom the information is sought,

and has a legitimate interest in the information sought for the purpose of preventing, detecting, investigating, combating or prosecuting money laundering or its predicate offences or terrorist financing.

The Access Restriction Regulations allow individuals to apply to the competent authority for protection from public disclosure under the LIA Regulations for periods of 3 years where they believe that their association with the legal person, if disclosed, will place them, or an individual living with them, at serious risk of kidnapping, extortion, violence, intimidation, or other similar danger or serious harm.

Conclusion

The draft regulations show the Cayman Islands continued commitment to transparency and anti-money laundering initiatives while remaining in line with international standards and best practices and providing safeguards for the protection of individual privacy in warranted circumstances.

With the Cayman Islands’ continued focus on quality, innovation and expertise, it seems reasonable to expect that the changes brought about by the Regulations will be absorbed by the market and in no way hinder the Cayman Islands’ continued success.

HSM can assist with all beneficial ownership matters and provide the necessary advice as to the application of the new beneficial ownership regime. Please connect with HSM Partner, Christian Victory or HSM Managing Partner, Huw Moses, for any enquiries.

The HSM Group specialises in Corporate and Commercial Law, Litigation, Restructuring, Insolvency, Private Client, Immigration, Employment Law, Family Law, Property, Debt Solutions and Intellectual Property in addition to providing comprehensive corporate services through HSM Corporate Services Ltd.

This publication is intended only to provide a summary of the subject matter covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. Alternative solutions also exist which may better suit the requirements of a particular individual or entity.

Following the recent removal of the Cayman Islands from the FATF grey list, the Cayman Islands has published the Beneficial Ownership Transparency Act, 2023 to better align the beneficial ownership regime more closely with the Cayman Islands’ anti-money laundering regulations. While the Act provides that Cabinet may make regulations extending access to beneficial ownership registers to the general public, public access would only be implemented once further regulations are made and approved by Parliament and will be subject to a “legitimate interest test.” This will include access to parties who are genuinely seeking information so as to prevent or combat money laundering and terrorist financing (for instance media and civil society organisations under specific circumstances).

With implementing regulations to be introduced in a phased approach during 2024, the new law will bolster the Cayman Islands’ continuing commitment to transparency while also protecting privacy and confidentiality in line with evolving global standards and best practices.

The primary changes are to:

introduce a new definition of beneficial owner;
bring additional forms of legal entity within scope;
remove and replace existing exemptions; and
introduce additional line items for reporting purposes.

Affected entities and their corporate service providers will need to update their systems and processes urgently in order to satisfy these new requirements.

As is currently the case, ordinary resident companies, not engaging a corporate services provider for the provision of registered office services, must establish and maintain their own beneficial ownership registers.

Beneficial Owner
The overall objective of the regime is to ensure transparency of the beneficial ownership of Cayman Islands entities. Under the new law, a Beneficial Owner in relation to a legal person means an individual who either (a) ultimately owns or controls, whether directly or indirectly, 25% or more of the shares, voting rights or partnership interests in a legal person; or (b) otherwise exercises ultimate effective control (through a chain of ownership or other than by direct control) over the management of the legal person; or (c), where there is no individual fitting within (a) or (b), an individual who exercises control of the legal person through other means (for example as a director or a CEO), but does not include an individual acting solely as a professional advisor or professional manager as defined in the new law.

Extended Scope
The meaning of ‘legal person’ has also been amended to include partnerships (excluding foreign partnerships registered in the Cayman Islands) and extends to all companies (excluding foreign companies registered in the Cayman Islands); limited liability companies; foundation companies; limited partnerships; limited liability partnerships and exempted limited partnerships.

Removal and Replacement of Exemptions
Former automatic exemptions for listed entities (or their subsidiaries), for entities licenced under a Cayman Islands regulatory law and for private and mutual funds will be replaced. Such legal persons will be required to provide written confirmation to their corporate services provider in order to show an alternative route to compliance as follows:

A licensed fund administrator or contact person for private or mutual funds will be required to provide the Registrar of Companies with the requested beneficial ownership information within 24 hours of a request being made or at any other time as the Registrar may reasonably stipulate.

All other exemptions will be removed.

Additional Required Particulars
Additional line items added to required particulars for individuals include nationality and the nature in which the individual owns or exercises control of the legal person.

Similarly, required particulars of a reportable legal entity will include the nature of the reportable legal entity’s ownership or its exercise of control of the legal person.

Conclusion
As a leader in ongoing anti-money laundering initiatives, the Cayman Islands continues to show its commitment to transparency with the publication of the Beneficial Ownership Transparency Act, 2023 in line with international standards.

With the Cayman Islands’ continued focus on quality, innovation and expertise, it seems reasonable to expect that the changes brought about by the Act will be absorbed by the market and in no way hinder the Cayman Islands’ continued success.

HSM can assist with all beneficial ownership matters and provide the necessary advice as to the application of the new beneficial ownership regime. Please connect with the key contacts below for any enquiries.

Key Contacts:

Christian Victory
Partner / Head of Corporate and Commercial
Tel: 1 345 815 7360
cvictory@hsmoffice.com

Kathy Macdonald
Associate
Tel: 1 345 815 7356
kmacdonald@hsmoffice.com

As Russia’s invasion of the Ukraine continues, the United Kingdom has pushed its hunt for Russian Oligarch’s assets into high gear and has fast tracked the Economic Crime (Transparency and Enforcement) Act 2022 (the “Law”) into force. The Law was given Royal Assent on 15 March 2022 and the register for overseas entities opened at Companies House in the UK on 1 August 2022. HSM’s Head of Corporate and Commercial, Peter de Vere, covers everything you need to know in this article.

This new legislation is intended to increase transparency and aid active enforcement of sanctions.

Of primary importance to clients will be the requirement in the Law for any ‘overseas entity’ owning UK property to register with Companies House in the UK and provide details of their beneficial owners.

What is an ‘overseas entity’?

An overseas entity is a legal entity that is governed by the law of a country or territory outside of the UK (note, this captures entities formed in the Cayman Islands).

For these purposes a ‘legal entity’ includes any entity which is a legal person under the law by which it is governed.

The above definition would appear to exclude Cayman Islands Trusts as these do not have a separate legal personality (but those Trusts which hold UK property indirectly through an overseas entity will still be caught by the Law).

What to do if your Cayman entity owns property in the UK or intends to do so?

Overseas entities that acquired property in the UK after 1 January 1999 or that acquire UK property in the future must apply for registration on the Register of Overseas Entities.

The overseas entity will need to provide basic details about itself (name, country of incorporation/formation, registered/principal office, service address, legal form and applicable governing law, details of any overseas public register which it is entered on and any registration number).

The entity will also need to deliver one of the following three statements about its registrable beneficial owners and the required information for that statement:

What is the ‘Required Information’ mentioned in the above table?

*designated persons’ means—

(a) persons designated under any power contained in the UK anti-money laundering regulations that authorizes an appropriate Minister to designate persons for the purposes of the regulations or of any provisions of the regulations, or

(b) persons named by or under United Nations Security Council Resolutions.

What is a registrable beneficial owner?

A ‘beneficial owner’ can be an individual, a legal entity or a Government or public authority. The Law provides that a person (X) is a “beneficial owner” of an overseas entity or other legal entity (Y) if one or more of the following conditions are met:

Condition one is that X holds, directly or indirectly, more than 25% of the shares in Y.

Condition two is that X holds, directly or indirectly, more than 25% of the voting rights in Y.

Condition three is that X holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of Y.

Condition four is that X has the right to exercise, or actually exercises, significant influence or control over Y.

Condition five is that (a) the trustees of a trust, or the members of a partnership, unincorporated association or other entity, that is not a legal person under the law by which it is governed meet any of the conditions specified above (in their capacity as such) in relation to Y, and (b) X has the right to exercise, or actually exercises, significant influence or control over the activities of that trust or entity.

Penalties for non-compliance?

Failure to register (or submitting false information) would be a criminal offence under the Law and would prevent the entity from being able to buy or sell UK property in the future.

A transfer of land in breach of the registration requirement would also amount to a criminal offence on both the entity and its responsible officers (such as a director), including fines of up to GBP£2,500/US$3,090 per day (for example for failing to register) or unlimited fines (for example for making false statements) or a prison sentence of up to 5 years.

Timing

Overseas entities who already own land in the UK will be given 6 months to register their beneficial owners or managing officers. This 6 month period is currently running and will be due to end on 31 January 2023.

Any new purchasers will need to register with Companies House from 5 September 2022.

HSM Corporate Services Ltd. encourages those who may be affected to start making arrangements now and our team is ready to assist.

As we draw closer to the end of 2022, many clients will be considering their Cayman Islands structures and querying whether any entities are surplus to requirements. HSM’s Head of Corporate and Commercial, Peter de Vere, covers the key points you need to know at this time of the year.

The desire to wind up any Cayman entities before the end of the year is fueled primarily by the need to avoid any annual fees for the maintenance of the Company being incurred next year (2023).

To avoid those fees the voluntary liquidation of a Cayman Company would typically need to commence in late November early December (at the latest) with the final meeting being held before the end of January.

This timetable results in an effective dissolution date into the next calendar year, while still avoiding the government fees for that year.

If a dissolution is not completed (i.e. if the final return is not filed) by 31 January then the full annual return fees for the new-year are due and payable to the Cayman Islands Government.

If the liquidation is more complicated then more time would be required and an even earlier start date would be necessary. It is important to note that the Companies Act (as Revised) stipulates that a company is dissolved upon the expiration of 3 months from the registration of the final return and this timing must be considered if a 31 December (or earlier) dissolution date is required. If you do not need a 31 December (or earlier) dissolution date then please note it is possible to complete the liquidation process before year end (without the need for the publication of expensive extraordinary gazettes etc.) if the liquidation process is started no later than 25 November 2022.

The above timing considerations also come into play if there may be increased operational efficiencies in completing the dissolution within the current calendar year if additional regulatory filings and other costs for stub years can be avoided.

For example, investment funds that are registered with the Cayman Islands Monetary Authority (“CIMA”) may need to consider an earlier commencement date to ensure that the final audited financials are completed and filed with CIMA prior to the final meeting of the Fund. CIMA requires that a Fund undertakes a final audit for the period either up to the date of the appointment of the third party liquidator or to the date of the full payment of the final redemptions.

Strike Offs

The option to strike off a company remains an attractive (and cheaper) option for many clients whose companies do not have an active history of trading or were set up only to hold a single asset.

Whilst a strike off does not entail the process of appointing a liquidator and carrying out a formal liquidation it should be remembered that a) the Registrar only strikes off companies in batches at the end of each financial quarter and as such if a year-end dissolution is required then a strike off application should be filed ideally no later than November and b) a strike off remains reversible within a 10 year time frame and should not be viewed as having the same finality of a formal liquidation.

Conclusion

HSM Chambers has a wealth of expertise in advising on both voluntary liquidations, official liquidations and strike offs.

We can accept liquidator appointments for companies HSM Corporate Services Ltd. has provided registered office for from incorporation and we would be happy to provide a fee quote for any of your dissolution needs.

Key Contact

Peter de Vere
Head of Corporate and Commercial
Tel: 1 345 815 7360
pdevere@hsmoffice.com

Most clients are now relatively familiar with the Cayman Islands Economic Substance regime requiring real economic substance for certain entities (known and ‘Relevant Entities’) carrying or certain activities (known as ‘Relevant Activities’).

Our firm’s previous article on the introduction of the International Tax Co-operation (Economic Substance) Act (the ‘ES Law’) can be found here.

The recent enactment of the International Tax Co-operation (Economic Substance) (Amendment of Schedule) Regulations, 2021 (‘ES Regulations’) on 29 June 2021 has now expanded the scope of the ES Law to include the following entities in the definition of Relevant Entities:-

A partnership (as defined under s.3 of the Partnership Act (a Revised)) except where the partnership is a local partnership;
An exempted limited partnership (as defined under s.2 of the Exempted Limited Partnership Act (as Revised)); and
A foreign limited partnership registered in the Cayman Islands under s.42 of the Exempted Limited partnership Act (as Revised)) (together with the other types of partnerships referenced above hereinafter referred to as the ‘Partnerships‘).

Based on this expansion of the definition of Relevant Entities it should now be noted that any Partnerships carrying on a Relevant Activity will now need to have the requisite economic substance in the Cayman Islands, be able to pass the Economic Substance Test (the “ES Test”) and make the necessary annual Economic Substance filings.

Albeit for the above a Partnership will not be a Relevant Entity and will not be required to pass the ES Test if it is:

an investment fund or an entity through which an investment fund directly or indirectly invests or operates;
tax resident outside of the Cayman Islands; or
a local partnership (where two persons or more carry on a business in common with a view of profit that is not part of an MNE Group (for tax purposes) and such partnership is only carrying on business in the Cayman Islands.

Compliance Timeline

The International Tax Co-operation (Economic Substance) (Prescribed Dates) (amendment) Regulations have introduced a transition period for compliance.

Partnerships formed on or after 1 July 2021 will be required to meet the ES Test from the date on which they commence their Relevant Activities. Partnerships formed prior to 1 July 2021 must satisfy the Test from 1 January 2022.

Partnerships operating as investment funds and partnerships tax resident outside of Cayman will only need to submit the usual ES Notification the Authority.

Key Contact:

Peter de Vere (Head of Corporate and Commercial)
pdevere@hsmoffice.com
Tel: +1 345 815 7360

As we draw closer to the end of 2021, many clients will be considering their Cayman Islands company structures and querying whether any entities are surplus to requirements.

The desire to wind up any Cayman entities before the end of the year is fueled primarily by the need to avoid any annual fees for the maintenance of the Company being incurred next year.

To avoid those fees the voluntary liquidation of a Cayman Company would typically need to commence in late November early December (at the latest) with the final meeting being held before the end of January.

This timetable results in an effective dissolution date into the next calendar year, while still avoiding the government fees for that year.

If a dissolution is not completed (i.e. if the final return is not filed) by 31 January then the full annual return fees for the new-year are due and payable to the Cayman Islands Government.

For a Cayman company to be dissolved by 31 December (and receive a 31 December date on a certificate of dissolution) its voluntary liquidation will need to have commenced before 30 August (assuming a zero balance sheet liquidation). If the liquidation is more complicated then more time would be required and an even earlier start date would be necessary. It is important to note that the Companies Act (as Revised) stipulates that a company is dissolved upon the expiration of 3 months from the registration of the final return and this timing must be considered if a 31 December (or earlier) dissolution date is required.

The above timing considerations also come into play if there may be increased operational efficiencies in completing the dissolution within the current calendar year (if additional regulatory filings and other costs for stub years can be avoided).

Strike Offs

The option to strike off a company remains an attractive (and cheaper) option for many clients whose companies do not have an active history of trading or were set up only to hold a single asset.

Conclusions

HSM Chambers has a wealth of expertise in advising on both voluntary liquidations, official liquidations and strike offs. We can accept liquidator appointments and would be happy to provide a fee quote for any of your dissolution needs.

Key Contact

Peter de Vere
Head of Corporate and Commercial
Tel: 1 345 815 7360
pdevere@hsmoffice.com

The Trade & Business Licensing (Amendment of Schedule) Regulations, 2020 (the “Amendment Schedule”) has been gazetted as of 1 May 2020.

Whilst earlier amendments to the Cayman Islands Trade & Business Licencing (“TBL”) regime got much coverage in the local press those earlier amendments merely deferred the CI$75.00 application fee for a short period. Whilst a temporary CI$75.00 savings should not be discounted as many local businesses are struggling during these times the Amendment Schedule provides much greater reprieve for local small and micro businesses.

In all cases Micro Businesses will have the TBL fees reduced by 100% and with the application fee deferral mentioned above this will mean that a Micro Business will not have to pay anything on application or renewal initially.

Important changes to note:

The Amendment Schedule will expire on 31 December 2021.
Small Businesses[1] and Micro Businesses[2] that are independently owned and operated; are for profit and have close control over operations with decisions taken by the owner will see temporary reductions in TBL fees (as outlined below).
Auditing service firms, financial service firms (other than insurance agents) and exempted companies which fit the definition of Micro Business or Small Business are excluded from the fee reductions.
Mobile Businesses[3] which fit the definition of Micro Business or Small Business will be eligible for the TBL fee reductions but the location of the mobile business will be determined by the block & parcel number on the TBL/application form.

Location of trade of business	Percentage reduction on fee
George Town	Micro Business	100%
George Town	Small Business	50%

West Bay	Micro Business	100%
West Bay	Small Business	50%

East End	Micro Business	100%
East End	Small Business	75%

North Side	Micro Business	100%
North Side	Small Business	75%

Bodden Town	Micro Business	100%
Bodden Town	Small Business	75%

Little Cayman	Micro Business	100%
Little Cayman	Small Business	50%

Cayman Brac	Micro Business	100%
Cayman Brac	Small Business	50%

HSM can assist with all TBL applications and renewals and can provide the necessary advice as to whether you qualify under the Small/Micro business incentive programme as well as updating the TBL Board should there be any change to the revenue of the business, number of employees and ownership of any business benefitting from the reduced fees.

Footnotes
[1] ‘Small businesses’ are those that, among other conditions, employ up to 12 employees (excluding the owner), and have an annual gross revenue not exceeding CI$750,000 in the preceding fiscal year.

[2] ‘Micro businesses’ are those that, among other conditions, employ up to four employees (excluding the owner), and have an annual gross revenue not exceeding CI$250,000 in the preceding fiscal year.

[3] “Mobile Business” is a business that is not operated from a fixed location but from a pedal cycle, motor cycle, motor car or other motor vehicle.

Key Contact

Peter de Vere
Head of Corporate and Commercial
Tel: 1 345 815 7360
pdevere@hsmoffice.com

Further to the Cayman Islands Governments’ recent changes to the Anti Money Laundering (AML)/Combatting the Financing of Terrorism (CFT) regime to include virtual asset services as “relevant financial business” the jurisdiction is now set to implement a registration and licensing regime for virtual asset service providers.

Virtual Asset (Service Providers) Bill (the “Bill”/the “Law”)
The Bill is currently in a consultation phase during which time comments can be provided to the Cayman Islands Government up until 8 April 2020 (date extension provided on March 21 due to COVID-19), but should the Bill be passed into Law in its current form we can expect the following:

Virtual Asset Services
The Bill defines virtual asset services as providing one or more of the following services or operations for or on behalf of a natural or legal person—

(a) exchange between virtual assets and fiat currencies;

(b) exchange between one or more other forms of convertible virtual assets;

(d) safekeeping or administration of virtual assets or instruments enabling control over virtual assets; or

(e) participation in, and provision of, financial services related to a virtual asset issuance or the sale of a virtual asset.

Virtual Assets are defined as “a digital representation of value that can be digitally traded or transferred and can be used for payment or investment purposes but does not include a digital representation of fiat currencies”.

It is important to note that under the Bill, Virtual Utility Tokens are not deemed to be virtual assets and a person or legal arrangement that provides services that involve these tokens only do not require registration or licensing under the Bill.

Registration/Licensing
Under the Bill a person (being a Cayman Islands company, a Cayman Islands general partnership, a Cayman Islands limited partnership, a Cayman Islands exempted limited partnership, a foreign company registered in the Cayman Islands, a Cayman Islands Limited Liability Company (LLC) or a Cayman Islands Limited Liability Partnership (LLP)) shall not carry on or propose to carry on any virtual asset services unless they are registered with the Cayman Islands Monetary Authority (“CIMA”) as a registered person, hold a virtual asset service licence, a sandbox licence or is otherwise already licensed by CIMA and has been granted a waiver from further licensing or registration.

It will be an offence to carry on business without a licence, registration or waiver and those found guilty will be liable on summary conviction to a fine of CI$25,000 and imprisonment for one year, and in the case of a continuing offense, to a fine of CI$10,000 for each day during which the offence continues.

Registered Persons
Any persons wishing to provide a virtual asset service which is not the provision of virtual asset custody services or the operation of a virtual asset trading platform will need to register with CIMA as a ‘registered person’.

Registered persons will need to apply with CIMA and be bound by the Anti-Money Laundering Regulations (as Revised) and the senior officers and trustees of the applicant will need to be ‘fit and proper persons’.

Once the application is approved the applicant will need to pay an application fee and annual renewal fees, which will be due on or before 15 January.

In considering the application to be a registered person CIMA will also consider whether a full licence or a sandbox licence should instead be applied for.

Virtual Asset Service Licence
Those applying for a virtual asset service licence (to provide virtual asset custody services or to operate a virtual asset trading platform) will also apply to CIMA who will consider whether:

(a) the applicant will be able to comply with the Law;

(b) the applicant will be able to comply with the relevant requirements of the Anti-Money Laundering Regulations (as Revised);

(d) the applicant has —

(i) personnel with the necessary skills, knowledge and experience;

(ii) facilities, books, records and accounting systems;

(iii) adequate capital and cybersecurity measures, as the Authority considers appropriate having regard to the size, scope and complexity of the business;

(e) the applicant’s senior officers and trustees are fit and proper persons to hold the respective positions;

(f) the applicant’s beneficial owners are fit and proper persons to have such control or ownership; and

(g) the applicant has complied with such other requirements under this Law which the Authority requests that the applicant complies with.

The application will need to be accompanied with an assessment fee.

CIMA may refuse or grant the licence or direct the applicant to apply for a sandbox licence or another licence under one of the regulatory laws where the virtual asset service is similar in nature to a service for which registration or a licence is required.

CIMA may also impose further regulatory requirements which it considers necessary based on its assessment of the virtual asset services to be provided by the applicant, the nature of supervisions required for the virtual asset service etc.

Where CIMA deems it necessary a licensee shall have its accounts audited at such times as CIMA may require.

Sandbox Licences
A sandbox licence is a temporary licence which can be granted for a period of up to one year and is subject to CIMA review as such times as CIMA deems appropriate.

CIMA will likely direct a registered person applicant or licence applicant to apply for a sandbox licence where:

the virtual asset represents an innovative use of technology or uses an innovative method of delivery that requires supervision and oversight that is not offered by a licence or registration under this Law or any other law;
it is in the best interest of the public, existing licensee or the financial markets for the virtual asset service to be temporarily restricted or for specific requirements to be placed temporarily on the provision of the virtual asset service;
the virtual asset service uses or promotes technology or method of delivery that may create systemic risk to the financial markets or otherwise to the jurisdiction; or
the virtual asset service poses an anti-money laundering, terrorism financing or proliferation financing risk that is not properly mitigated by the Anti-Money Laundering Regulations (as Revised) or the Law.

Amendments to the Securities Investment Business Law (“SIBL”)
In line with the proposed Virtual Asset (Service Providers) Bill the SIBL is being amended to include virtual assets in the definition of securities. In particular virtual assets which can be sold, traded or exchanged immediately or at any time in the future that (a) represent or can be converted into any other securities listed on schedule 1 of the SIBL or (b) represent a derivate of any of the securities listed in Schedule 1 of the SIBL.

With the above in mind, SIBL licences and or registration will likely become necessary in the near future for those dealing with Virtual Assets.

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