Cayman Islands: A Financial Services: Regulatory Overview

Current Regulatory Landscape and Outlook

The reliable and competitive legal and regulatory regimes of the Cayman Islands continue to support its place as a key international financial centre and a leading jurisdiction of choice for the financial services industry.

Key regulated sectors

The Cayman Islands retains its prominence as a global market leader for investment funds, with the Cayman Islands Monetary Authority (CIMA) (the jurisdiction’s financial services regulator) recording almost 13,000 mutual funds and almost 18,000 private funds as registered in the jurisdiction – supported by licensed service providers, including 67 licensed fund administrators – as at Q4 2025.

Banking also remains a key regulated sector for the Cayman Islands, with 77 bank and trust licensees operating under CIMA’s supervision through the end of 2025. As at December 2024, the jurisdiction ranked twentieth internationally based on the value of cross-border assets (USD306.2 billion); and twenty-third in terms of cross-border liabilities (USD266.2 billion), which highlights the role of the Cayman Islands as a financial intermediary.

The Cayman Islands also continues to be a leading domicile for captive insurers and a growing centre for life and annuity reinsurance, with the jurisdiction’s notable strengths for this industry including its focus on internationally oriented business, particularly structures supporting North American risks; CIMA’s experienced supervisors; and the maturity and stability of its legal system. A total of 743 insurance entities were licensed by CIMA as at the end of 2025 (up from 708 as at the end of 2023), the vast majority (693) being captive insurers; and the jurisdiction has an increasing number of standalone international insurers and reinsurers which benefit from the jurisdiction’s international recognition, well-developed professional services infrastructure, sophisticated regulatory frameworks (which apply proportionate, risk-based supervisory models tailored to the nature and complexity of (re)insurers’ activities), tax neutrality and proximity and familiarity with North American insurance markets (noting that Cayman’s relevant regulatory frameworks are more closely aligned with US prudential regulation than with EU Solvency II – as approximately 90% of insurance business in the Cayman Islands involves risks emanating from North America).

The jurisdiction also experienced notable growth in the technology sector throughout 2025 alongside CIMA’s continued implementation of a dedicated regulatory regime for virtual asset service providers (VASP).

Aside from the above sectors, corporate and fiduciary services and securities investment business continue to mark key regulated industries for the Cayman Islands, with a total of 135 trust companies, 119 company managers, 23 corporate services providers and 1,391 securities investment business entities recorded as licensed or registered in CIMA’s latest available data for 2025.

Financial Action Task Force (FATF) initiatives and jurisdictional readiness

The Cayman Islands has launched its 2025–2026 National Risk Assessment (NRA), a two-year initiative to strengthen its AML, countering the financing of terrorism, and counter-proliferation financing (AML/CFT/CPF) framework, preparing the jurisdiction for the upcoming 5th Round Caribbean Financial Action Task Force (CFATF) Mutual Evaluation (scheduled to begin in 2027) and reinforcing the Cayman Islands’ reputation as a global financial services leader.

Relevant financial businesses operating in the Cayman Islands should take note of this and continue to: (i) integrate proliferation financing risk management and financial sanctions screening into their AML/CFT/CPF policies, procedures, systems and controls; and (ii) maintain accurate, up-to-date and accessible beneficial ownership information – noting that 2026 will likely bring increased regulatory focus on implementation and effectiveness in these areas of the jurisdiction’s AML/CFT/CPF framework.

Beneficial ownership transparency

Legislative amendments were brought in through 2025, designed to further enhance, modernise and better align the jurisdiction’s beneficial ownership transparency regime with global standards.

The introduction of regulations (under the Beneficial Ownership Transparency Act) governing “legitimate interest” access to beneficial ownership information in respect of in-scope Cayman entities has provided and clarified the parameters within which certain members of the public may apply for access to certain information contained on beneficial ownership registers (ie, where such access is requested for the purposes of preventing, detecting, investigating, combatting or prosecuting money laundering and/or terrorist financing). The introduction of parallel “access restriction” regulations provides an important framework within which beneficial owners and/or senior managing officials may also apply to restrict access to their information where a serious risk of harm can be demonstrated.

Heading into 2026, Cayman Islands entities would be well advised to: (i) review and ensure that information on their beneficial ownership registers remains accurate and up-to-date; (ii) consider whether any “access restriction” grounds might apply in respect of any of their beneficial owners and/or senior managing officials; and (iii) ensure that they are appropriately prepared to (if ever required) respond to a “legitimate interest” access application.

International tax co-operation and crypto-asset reporting

The Cayman Islands introduced domestic regulations in 2025 to implement the OECD’s Crypto-Asset Reporting Framework (CARF), extending the jurisdiction’s established tax transparency and international reporting architecture into the digital asset space.

This development builds on the jurisdiction’s existing implementation of automatic exchange of information under the FATCA and Common Reporting Standard (CRS) regimes, positioning crypto-asset reporting within the same global co-operation framework that applies to traditional financial assets and accounts. The result is a modernised and more comprehensive reporting environment in which certain crypto-asset service providers will be required to collect and report customer and transaction data for the purposes of international exchange with participating tax authorities, reinforcing Cayman’s alignment with evolving international transparency standards.

VASP regime

The Cayman Islands has established a clear and purpose-built regulatory framework for VASPs. Under this framework, persons carrying on, as a business: (i) the exchange, trading or transfer of virtual assets (including virtual asset trading platforms); (ii) the provision of virtual asset custody services; (iii) the participation in and provision of financial services related to a virtual asset issuance or sale, are required to register or be licensed with CIMA.

Applicant VASPs are required to demonstrate robust AML/CFT/CPF compliance arrangements, client asset safeguarding, and appropriate governance and outsourcing and technology risk management – reflecting a broader focus by CIMA on operational resilience and sound risk management and controls across the financial services sector.

The VASP regime is therefore intended to enable VASPs to adopt and operate new technologies and innovative models within a credible and stable regulatory environment and, as international expectations around consumer protection and fintech regulation continue to develop, Cayman’s framework for VASPs should position in-scope businesses to meet standards that broadly align with those seen in major onshore markets – and reflect the jurisdiction’s role as a recognised and well-regulated hub for digital asset businesses.

Outlook

Looking ahead, the Cayman Islands is expected to continue to enhance its existing regulatory frameworks for VASPs, securities investment businesses and in respect of CRS implementation. These anticipated developments reflect the jurisdiction’s ongoing commitment to maintaining internationally respected standards and ensuring that the Cayman Islands remains an ultra-competitive, highly reputable and globally recognised international financial centre.

With industry associations such as Cayman Finance, the Alternative Investment Management Association (AIMA) and the Cayman International Reinsurance Companies Association (CIRCA) (most of which Appleby’s regulatory team actively participates in and holds executive positions with) continuing to consult on proposed legislative changes and regulatory measures, the strength of the financial services industry in the Cayman Islands is expected to continue to support both sound and commercially responsive legislative and regulatory development.