Remote VASP serving residents in Barbados

Primary Legislation: Digital Assets Act, 2019 (as amended).

Regulatory Body: The Financial Services Commission (FSC) Barbados is the primary regulator responsible for licensing, supervision, and enforcement under the Digital Assets Act.

Required License: A Virtual Asset Business License.

Legal Entity and Local Presence:

The applicant must typically be a Barbadian incorporated company or a foreign company registered in Barbados.

A registered office in Barbados.

The Act may imply or require key management personnel to be resident in Barbados, or at least regular physical presence for operational oversight.

The Digital Assets Act mandates that a VASP must maintain adequate financial resources to operate its business.

Virtual Asset Business Act, 2022 (VABA, 2022): This is the cornerstone legislation specifically designed to regulate VASPs in Barbados. It provides for the registration, licensing, supervision, and regulation of virtual asset businesses, bringing them squarely under the AML/CFT regime. It aligns Barbados's regulatory framework with FATF Recommendation 15 on new technologies.

Money Laundering and Financing of Terrorism (Prevention and Control) Act, 2011-23 (as amended) is Barbados's overarching AML/CFT legislation. Other sectoral statutes, including the Virtual Asset Service Providers regime (VABA), require covered entities to comply with the AML/CFT obligations set out in this Act for financial institutions and designated non‑financial businesses and professions (DNFBPs).

Anti-Terrorism Act (ATA), Chapter 151: This Act provides the legal basis for combating the financing of terrorism and is integral to the broader CFT framework that VASPs must adhere to.

Proliferation Financing (Prevention) Act, 2019: Addresses financing for weapons of mass destruction, further strengthening the CFT regime.

The Financial Services Commission (FSC) is currently undertaking a major regulatory overhaul of its financial services legislation, which is superseding or replacing previous guidelines, directives, and prudential statements related to VASPs under the VABA and PMLFTA.

VASPs must be licensed or registered by the FSC to operate legally in Barbados. This process involves demonstrating robust internal controls, governance structures, and adequate financial resources, including a sound AML/CFT compliance program.

Identity Verification: Obtaining and verifying the identity of the customer (individual or legal entity) using reliable, independent source documents, data, or information.

For Individuals: Name, residential address, date of birth, nationality, unique identification number (e.g., passport, national ID).

For Legal Entities: Name, legal form, proof of existence, registered address, principal place of business, board of directors, and verification of individuals authorized to act on behalf of the entity.

Beneficial Ownership Identification: Identifying and taking reasonable measures to verify the identity of the beneficial owner(s) of the customer, especially for legal persons and arrangements. This includes understanding the ownership and control structure.

Purpose and Intended Nature of Business Relationship: Understanding the purpose and intended nature of the business relationship or occasional transaction.

Ongoing Monitoring: Conducting ongoing due diligence on the business relationship and scrutiny of transactions undertaken throughout the course of the relationship to ensure that the transactions are consistent with the VASP's knowledge of the customer, their business, and risk profile, including, where necessary, the source of funds or virtual assets.

Enhanced Due Diligence (EDD): Applying enhanced measures for higher-risk situations, including:

Politically Exposed Persons (PEPs)

Customers from high-risk jurisdictions (as identified by FATF or national assessments)

Complex or unusual transactions or business structures

Transactions involving high value or specific types of virtual assets deemed higher risk.

VASPs must determine the source of funds and source of wealth for high-risk customers.

Simplified Due Diligence (SDD) may be applied only where a documented, demonstrably low risk of money laundering or terrorist financing exists, in line with FATF and similar risk-based frameworks; it is not a blanket permission defined solely by the FSC and must follow proportionate, dynamic risk assessment criteria set by applicable AML regulators.

Obligation to Report: VASPs are legally obligated to report any suspicious transactions, including attempted transactions, to the Financial Intelligence Unit (FIU) of Barbados.

Grounds for Suspicion: This includes suspicion of money laundering, terrorist financing, proliferation financing, or any other criminal activity, regardless of the amount or value involved.

No Tipping-Off: VASPs and their employees are prohibited from disclosing to the customer or any third party that a report has been made or that a money laundering/terrorist financing investigation is being conducted.

Copies of identification documents, verification data, beneficial ownership information, and records of analysis performed.

Transaction Records: All transaction data, including dates, amounts, types of virtual assets, sender and recipient information, and any associated messages or instructions.

Adopted: Yes, Barbados has adopted legislation to regulate Virtual Asset Service Providers (VASPs) and incorporate AML/CFT obligations consistent with FATF recommendations, including the principles underlying the Travel Rule.

The Virtual Asset Business Act, 2019 in Barbados does not explicitly outline penalties under Part VIII – Offences and Penalties as stated; the available evidence only confirms a $125,000 fine without referencing this specific part.

The Virtual Asset Business Act, 2019 in Barbados does not explicitly outline penalties under Part VIII – Offences and Penalties as stated; the available evidence only confirms a $125,000 fine without referencing this specific part.

Section 18 of the Act requires licensees to keep records that are "sufficient to reconstruct individual transactions" and to retain information to identify customers, originators, and beneficiaries.

Barbados's Financial Services Commission (FSC) is responsible for supervising VASPs and is expected to issue guidance on how VASPs should technically comply with these obligations, aligning with the FATF's June 2020 Guidance on Virtual Assets and VASPs, which details the information to be exchanged and the need for reliable, secure, and compliant transmission mechanisms.

The FATF's 5th Enhanced Follow-Up Report (July 2023) indicated that Barbados still needed to develop more specific guidance for VASPs on the technical aspects of implementing the Travel Rule.

Operating without a License (Section 35):

Individual: Fine of BBD $100,000 to $250,000 or imprisonment for 5 to 10 years, or both.

Body Corporate: Fine of BBD $250,000.

Regulator: Barbados Financial Services Commission (FSC)

Entity Targeted: Implicitly, any Virtual Asset Service Provider (VASP) operating or attempting to operate in Barbados without a license, or failing to comply with the Digital Assets Act, 2019 and associated regulations. The FSC also targets the general public with warnings about the risks of unregulated entities. Violation Type: Operating an unlicensed VASP, failure to meet AML/CFT requirements, consumer protection breaches by unregulated entities.

Digital Assets Act, 2019: This is the foundational legislation for regulating digital assets and VASPs in Barbados. It outlines licensing requirements, supervisory powers of the FSC, and penalties for non-compliance.

FSC Public Warnings: The FSC frequently issues general warnings to the public about dealing with unregulated entities and the risks associated with various financial products, including those related to cryptocurrencies. While these aren't enforcement actions against a specific entity with a fine, they are a form of regulatory action aimed at consumer protection and highlight the FSC's vigilance. For specific warnings, you would need to browse their 'News & Updates' or 'Public Notices' sections, but these usually warn against types of scams or the dangers of unlicensed activity rather than sanctioning a named, operating entity with a fine.

Relatively New Framework: Enforcement actions often take time to materialize after a regulatory framework is put in place.