Financial Crime World

Here is the converted article in Markdown format:

VFSC Approves Guidelines for Digital Asset Service Providers

The Vanuatu Financial Services Commission (VFSC) has released guidelines for digital asset service providers, paving the way for a regulated market in the Pacific nation.

Requirements for Digital Asset Service Providers

The guidelines outline the requirements for entities seeking to provide financial services related to digital assets, such as cryptocurrency exchanges and wallets. The VFSC has approved Class D financial dealer licenses for companies that meet the prescribed standards.

  • Digital asset service providers must obtain a Class D license if they propose to:
    • Issue financial products linked to or referencing digital assets
    • Invest in digital assets
    • Enable consumers and investors to have exposure to digital assets

Application Process and Requirements

To obtain a Class D license, applicants must provide evidence of:

  • Minimum unimpaired capital of USD$500,000
  • A compliant product disclosure statement
  • Details of their business plan, organizational structure, risk management strategy, and custody arrangements
  • Measures to ensure the confidentiality, security, and reliability of client information

Anti-Money Laundering and Counter-Terrorism Financing Compliance

The VFSC has emphasized the importance of anti-money laundering and counter-terrorism financing (AML/CTF) compliance. License holders must:

  • Apply KYC principles
  • Maintain records of ultimate beneficial ownership
  • Provide detailed information on their AML/CTF procedures

Physical Presence and Key Personnel Requirements

Class D license holders must establish a physical presence in Vanuatu with key personnel present, including at least one director, a manager, and a chief technology officer.

Prohibited Activities

The VFSC has prohibited initial coin offerings (ICOs) under the Class D license.

Future Regulation of Digital Asset Exchanges

The regulator acknowledged that while digital assets are recognized as an asset class under the Financial Dealers Licensing Act, there is no current regulatory or legal framework for exchanges trading in these assets. The VFSC will address market manipulation and fraud concerns once proper legislation is written and enforced.

Contact Information

For further information on the guidelines and licensing requirements, please contact:

  • Mr. Joshua Tari, Manager of the Supervision Department at the VFSC
  • Email: tjoshua@vfsc.vu
  • Phone: (678) 22247
  • Fax: (678) 22242