Virtual Asset Brokers and Providers Under Scrutiny
A comprehensive risk assessment report has been released, highlighting the various channels through which virtual assets (VAs) are bought and sold in Mauritius. The report identifies key players in the VA market, including wallet providers, exchanges, brokers, management providers, and ICO providers.
VASPs: The New Players on the Block
The report defines Virtual Asset Service Providers (VASPs) as entities that provide services related to virtual assets, such as wallets, exchanges, broking, and management. VASPs play a crucial role in facilitating VA transactions, but they also pose risks related to money laundering and terrorist financing (ML/TF).
Interaction with Formal and Informal Sectors
The report notes that VASPs interact with two distinct ecosystems: the formal sector, which is regulated by anti-money laundering and combating the financing of terrorism (AML/CFT) regulations, and the informal sector, which operates outside these regulations.
VASP Channels
The report identifies 27 VASP channels, including:
- Hot wallets
- Cold wallets
- P2P transactions
- P2B transactions
- Fiat-to-Virtual exchanges
- Virtual-to-Fiat exchanges
- Virtual-to-Virtual exchanges
- ATMs
- Merchants
- Cards
- Fund management
- Fund distribution
- Compliance, audit, and risk management
- Fiat-to-Virtual exchanges
- Virtual-to-Virtual exchanges
- Development of products and services
- Security token offerings (STOs)
- Initial exchange offerings (IEOs)
- Platform operators
- Custody of assets
- Investment into VA-related commercial activities
- Non-security tokens and hybrid trading activities
- Stablecoins
- Crypto escrow service
- Crypto-custodian services
- Fees
- New assets
Sector Interaction
The report notes that only two sectors, banking and non-banking financial institutions (NBFI), interact with 7 VASP channels.
Conclusion
The risk assessment report highlights the need for a comprehensive approach to regulating VASPs in Mauritius. The informal sector, which operates outside AML/CFT regulations, poses significant risks related to ML/TF. To address these risks, it is essential to develop effective strategies for countering ML/TF threats and ensuring that all VASP channels are compliant with AML/CFT regulations.