Virtual Asset Ecosystem Under Scrutiny: A Risk Assessment Report
Mauritius is taking a proactive approach to combat money laundering and terrorist financing (ML/TF) threats by assessing Virtual Asset Service Providers (VASPs) for their interactions with various sectors.
The Role of Virtual Asset Service Providers
The VASPs play a crucial role in the virtual asset ecosystem, facilitating transactions and providing services such as:
- Wallet management
- Exchange
- Brokering
- Payment processing
- Management
The report highlights 27 channels through which VASPs interact with various sectors, including:
- Banks
- Non-bank financial institutions (NBFI)
- Trust and company service providers
- Casinos
- Dealers in precious metals and stones
- Real estate agents
- Accountants
- Legal professionals
Formal and Informal Sectors: A Different Approach
The report distinguishes between two ecosystems:
- Formal Sector: Regulated by anti-money laundering and combating the financing of terrorism (AML/CFT) regulations. This sector includes institutions such as:
- Banks
- NBFI
- Trust and company service providers
- Informal Sector: With little to no AML/CFT compliance framework. This sector encompasses entities that operate outside these regulatory frameworks.
Sector Interaction: A Key Finding
The assessment found that only two sectors:
- Banking
- NBFI
interact with seven VASP channels, including:
- Virtual asset wallet providers
- Exchanges
- Brokers
- Payment processors
- Management services
This highlights the need for greater awareness and vigilance in these sectors to prevent ML/TF activities.
Concluding Remarks
The risk assessment report underscores the importance of a robust regulatory framework to combat ML/TF threats in the virtual asset ecosystem. VASPs must be vigilant in identifying and reporting suspicious transactions, while financial institutions and other sectors must ensure compliance with AML/CFT regulations. The report serves as a wake-up call for all stakeholders to work together in preventing illicit financial activities and maintaining the integrity of the virtual asset market.