(CNS): An actual property agent raised eyebrows throughout the group after conducting the first-ever sale of property the place a purchaser used cryptocurrency. The small print of the sale and purchaser haven’t been launched, however the Cayman Islands Financial Authority (CIMA) has mentioned that the multi-million greenback deal carried out utilizing digital assess was above board as a result of the specialist escrow supplier that processed the sale is registered with the authority. However the sale of luxurious property to abroad traders and cryptocurrencies stay two of the highest considerations for cash laundering danger, in accordance with the federal government.
Michael Joseph, the agent who offered the property utilizing Parallel Restricted, a digital asset service supplier (VASP), mentioned this was a recreation changer and a “huge evolution” for Cayman however “undoubtedly raises questions”.
He mentioned that whereas that is the primary transaction carried out utilizing digital foreign money it gained’t be the final, however the potential cash laundering or different dangers referring to the helpful house owners or origins of the cash are mitigated due to the due diligence carried out by the escrow agency.
“The usual requirement stays for the agent to finish their KYC [know your customer] course of as common,” Joseph informed CNS in reply to our questions concerning the potential dangers. “No oligarchs or drug sellers would survive the method.”
Laura Birrell from Parallel, which is the one agency of its sort in Cayman registered with the regulator, agreed with Joseph. “Nefarious gamers could be unlikely to outlive the diligence course of that not solely Parallel carries out, however the actual property brokers and attorneys perform too,” she mentioned.
Till now, with out this kind of go-between, described as gate-keepers by authorities officers, traders haven’t been in a position to purchase property utilizing cryptocurrency because it was unimaginable to fulfill the supply of funds and compliance necessities, Joseph mentioned.
Though property gross sales are regulated by the Division of Commerce and Funding, cryptocurrencies are regulated by the Cayman Islands Financial Authority, so this sale fell beneath CIMA supervision. CIMA mentioned that it has consulted with different authorities companies, and can proceed to take action the place legally permissible and crucial, to offer correct oversight of a majority of these regulated and registered entities.
“In accordance with the Anti-Cash Laundering Laws, Parallel is topic to AML/CFT supervision by CIMA and is, due to this fact, obligated to adjust to such regulatory necessities, together with the Journey Rule, which requires all VASPs to receive, maintain and share particular data on digital asset transfers,” CIMA officers informed CNS. “As with all regulated entities, CIMA will proceed to watch Parallel’s enterprise actions to make sure compliance with the VASP Act and AML laws.”
The DCI mentioned registered entities, such because the dealer on this transaction, are supervised to make sure they’re AML/CFT compliant, as required by the AML rules. “As a part of this supervision, transactions such because the current sale of property by the use of cryptocurrency are reviewed for compliance with AML laws and kinds a part of the continued monitoring carried out by DCI’s compliance group for its regulated entities,” a spokesperson said.
However, digital belongings and cryptocurrency transactions in addition to the sale of property to abroad patrons stay key areas of vulnerability for the Cayman Islands, in accordance with its personal consultants. Each the DCI’s 2021 Supervisory Report and the Nationwide Threat Evaluation 2021, which had been not too long ago made public, famous the chance posed by the actual property sector.
The NRA discovered that digital belongings current a excessive danger, and regardless of a world transaction quantity of some US$3 trillion in cryptocurrency and its integration into the mainstream financial system, criminals can switch, combine and layer illicit funds into digital belongings, after which again to fiat foreign money, to obfuscate the unique supply and goal of the asset.
