Brunei

**No Specific VA Licensing Regime:** There is no dedicated law or regulation in Brunei that specifically defines, regulates, or licenses virtual asset service providers (VASPs) for activities like operating crypto exchanges, providing crypto custody, or processing crypto payments.

**AMBD Warnings:** AMBD has consistently warned the public about the risks associated with investing in virtual currencies and participating in Initial Coin Offerings (ICOs), highlighting their speculative nature, volatility, lack of underlying value, and the absence of regulatory protection.

**VAs Not Legal Tender:** Cryptocurrencies are not recognized as legal tender in Brunei.

Money-changing and remittance activities involving the exchange or transfer of fiat funds in Brunei must be licensed by the Brunei Darussalam Central Bank (BDCB) under the current regulatory framework; BDCB is the successor to the Autoriti Monetari Brunei Darussalam (AMBD), and licensing is no longer issued under the 2011 Order in AMBD’s name.

**Banking Business:** Under the Banking Order, 2006, if it involves taking deposits or providing other banking services.

**Custody Providers:** If a custody provider holds fiat currency on behalf of customers, or offers services that resemble trust services or deposit-taking, it could potentially be subject to:

**Trustee Act** (though less likely for pure crypto custody)

**Payment Processors (involving Fiat):** If a payment processor facilitates payments where fiat currency is transferred (even if converted to or from crypto in the process), it would likely fall under:

**Money-Changing and Remittance Businesses Order, 2011:** Requiring a license for money services businesses.

**Token Issuers/Brokers (if deemed Securities):** If a virtual asset is structured in a way that it constitutes a "security" under Brunei law (e.g., representing ownership, debt, or a share in profits), then activities related to its issuance, trading, or dealing would be subject to:

**Securities Market Order, 2001 (and subsequent amendments):** This would require licenses for capital market services.

**Capital Requirements:** Vary significantly depending on the type of license (e.g., banking license requires substantial capital, while a money-changing/remittance license has lower, but still significant, capital requirements).

**AML/KYC Requirements:** Brunei has robust Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) laws. Any financial institution, or entity performing financial activities, would be subject to strict AML/CFT obligations, including:

Customer Due Diligence (CDD) / Know Your Customer (KYC) procedures.

Suspicious Transaction Reporting (STR) to the Financial Intelligence Unit (FIU) under the AMBD.

Compliance with the Anti-Money Laundering Order, 2000 and the Anti-Terrorism Order, 2011 (and subsequent updates).

**Local Presence:** Yes, generally, a local physical presence and local management/board members are required for licensed financial institutions in Brunei.

**Pre-application discussions:** With AMBD to understand requirements and feasibility.

**Submission of detailed business plan:** Including operational model, risk management, governance, IT systems, and financial projections.

**Fit and Proper Test:** For directors, shareholders, and key management.

**Meeting Capital and other prudential requirements.**

**Ongoing supervision and compliance reporting.**

**Conservative Approach:** Brunei's regulators are generally conservative. Operating in an unregulated space with high risk, without specific guidance from AMBD, carries significant legal and reputational risks.

Brunei has already integrated virtual assets into existing regulatory frameworks with a measured, consumer-protection-first approach, rather than merely considering future regulations based on international standards.

**Legal Advice:** It is absolutely essential to seek local legal counsel in Brunei to assess the specific nature of your proposed virtual asset activities and determine if any existing financial regulations might apply.

Autoriti Monetari Brunei Darussalam (AMBD) Official Website: This is the primary source for all financial regulations and official statements.

Look for sections on "Legislation," "Financial Stability," "Prudential Regulations," and "Consumer Information" for official circulars or warnings.

Key Legislation (available on AMBD website, usually under 'Legislation' or 'Acts').

**AMBD Order, 2010:** Establishes the central bank and its powers.

**Banking Order, 2006:** Regulates banking business.

**Securities Market Order, 2001 (and relevant subsidiary legislation):** Regulates capital market activities.

**Anti-Money Laundering Order, 2000 (and subsequent amendments/regulations):** Outlines AML/CFT obligations.

**Anti-Terrorism Order, 2011 (and subsequent amendments/regulations):** Outlines CFT obligations.

**Shares or debentures** of a corporation or an unincorporated body.

**Units in a collective investment scheme** (like mutual funds or unit trusts).

**Derivatives** (e.g., options, futures, contracts for differences related to securities).

**Interests in a partnership or limited liability partnership** where the investors do not have day-to-day control over the management of the business.

**Any right, option or interest** in respect of any of the above.

An **investment of money or assets**.

In a **common enterprise** (e.g., the token issuer's project).

With an **expectation of profit**.

Primarily derived from the **managerial or entrepreneurial efforts of others** (the issuer or third parties).

And embodies the characteristics of an instrument already defined as a "security" in the SMO.

**Investment Tokens (Security Tokens):** Tokens that represent:

**Equity:** Entitlement to a share in profits, voting rights, or ownership in the underlying entity (similar to shares).

**Debt:** A claim on future income or principal repayment (similar to debentures or bonds).

**Units in a Collective Investment Scheme:** Tokens that pool investor funds for investment purposes, managed by a third party, with investors expecting returns from that management.

**Tokens providing rights to future profits or revenue streams** from a specific project or enterprise.

**Tokens that derive their value from an underlying asset** and offer an investment return to holders, especially if the asset's management is external to the token holder.

**Utility Tokens (Conditional):** While often designed to provide access to a product or service, a utility token *can* be deemed a security if:

It is marketed with an emphasis on its investment potential rather than its utility.

Its value is primarily speculative, derived from the efforts of others, and not immediate consumption.

The underlying product/service is not yet functional or is indefinitely delayed, making the token primarily an investment vehicle.

**Payment/Currency Tokens (Generally Not Securities):** Tokens designed primarily as a medium of exchange (e.g., Bitcoin, stablecoins) are generally not considered securities, unless they are structured to provide investment returns, or represent a claim on a pooled fund of assets designed for investment purposes. However, they might fall under other regulations, such as those related to anti-money laundering (AML) and counter-financing of terrorism (CFT) or e-money.

**Prospectus Requirement:** Generally, an issuer wishing to offer securities to the public in Brunei must:

Prepare and lodge a **prospectus** with the BDCB.

Obtain **approval from the BDCB** for the offer document.

Ensure the prospectus contains all material information necessary for investors to make an informed decision.

**Exemptions:** The SMO provides for certain exemptions from the prospectus requirement, which typically include:

**Small Offers:** Offers made to a limited number of persons or for a limited amount of capital.

**Private Placements:** Offers made only to specific sophisticated or institutional investors (e.g., high-net-worth individuals, accredited investors, financial institutions).

**Offers to Existing Shareholders:** Offers to current shareholders on a pro-rata basis.

Offers of certain types of government securities.

The specific conditions for these exemptions would be detailed in the SMO and its subsidiary regulations.

**Licensed Trading Platforms:** Any platform facilitating the secondary trading of such tokens must be licensed as a "stock market" or "approved exchange" under the SMO by the BDCB. This requires adherence to rules on market integrity, surveillance, investor protection, and operational resilience.

**Licensed Intermediaries:** Entities or individuals involved in facilitating trades (e.g., brokers, dealers) would need to hold the appropriate Capital Markets Services Licence (CMSL) from the BDCB for dealing in securities.

**Market Conduct Rules:** All trading activities would be subject to market conduct rules to prevent market manipulation, insider trading, and other illicit activities.

**AML/CFT Compliance:** Any platform or intermediary dealing with crypto assets, regardless of their security classification, must comply with Brunei's anti-money laundering and counter-financing of terrorism regulations, including customer due diligence (CDD) and suspicious transaction reporting (STR) obligations.

**Market Size:** Brunei's financial market is relatively small, and the volume of crypto-related activities, particularly large-scale ICOs or STOs targeting Bruneian investors, has been limited.

**Regulatory Approach:** The BDCB generally adopts a cautious and guidance-oriented approach, often issuing warnings to the public about the risks associated with investing in unregulated products or with entities not licensed in Brunei.

**Proactive Warnings:** The BDCB has frequently issued public warnings about unlicensed financial service providers and investment schemes, including those involving virtual assets. These warnings serve to educate the public and deter illegal activities before they escalate to formal enforcement actions.

Issue a **cease and desist order**.

Place the entity on its **Investor Alert List**.

Impose **administrative penalties or fines**.

Refer the matter for **criminal prosecution** under the SMO if severe breaches are found.

**Brunei Darussalam Central Bank (BDCB) Official Website:**

This is the primary source for official announcements, publications, and regulatory frameworks. Look under sections like "Financial Regulation," "Publications," or "Consumer Information" for relevant guidance or warnings.

This legislation can typically be found on the **Attorney General's Chambers (AGC) Brunei Darussalam** website, which hosts Brunei's consolidated laws.

`https://www.agc.gov.bn/` (You would need to navigate or search for the "Securities Markets Order, 2015" within their legal database.)

The BDCB regularly updates a list of unlicensed entities that are involved in potentially illegal financial activities. While not specific to crypto securities classification, it reflects the BDCB's enforcement posture against unregulated investment schemes.

**Approach:** **Restrictive / Effectively Unregulated (leading to a de facto ban on local operations).** Brunei has not established a comprehensive or partial regulatory framework specifically for cryptocurrencies. Instead, it operates on a principle of caution, primarily driven by concerns around consumer protection, financial stability, and anti-money laundering/combating the financing of terrorism (AML/CFT) risks.

The central bank of Brunei Darussalam is the Brunei Darussalam Central Bank (BDCB), not Bank Negara Brunei Darussalam (BNBD). BDCB was established on 1 January 2021, taking over the functions of the Autoriti Monetari Brunei Darussalam (AMBD).

The official central bank of Brunei is Brunei Darussalam Central Bank (BDCB), and its website is bdcb.gov.bn; Bank Negara Brunei Darussalam (BNBD) is not the current name or website.

**AML/CFT Order, 2011 (as amended):** This order provides the framework for combating money laundering and terrorist financing. While not specific to crypto, any financial institution or Designated Non-Financial Businesses and Professions (DNFBPs) dealing with funds (even if derived from virtual assets) would fall under its purview if they operate within the traditional financial system.

**Financial Services Act, 2006 (as amended):** This act governs the licensing and regulation of financial institutions. Without specific inclusion of crypto-related activities, crypto-related businesses generally do not fall under its licensing scope.

**No Official Recognition or Licensing:** There are no specific regulations that recognize or license cryptocurrency trading platforms or exchanges in Brunei. This means no entity can legally set up and operate a cryptocurrency exchange or offer related services (like wallet custody or initial coin offerings) within Brunei's jurisdiction.

**Public Advisories:** The predecessor to BNBD, AMBD, had issued public advisories in the past cautioning the public about the risks associated with virtual currencies, highlighting their speculative nature, lack of regulation, and potential for fraud and money laundering. These advisories reflect the continued cautious stance of the Bruneian authorities.

**No Local Regulated Exchanges:** Consequently, there are no legally established or licensed cryptocurrency exchanges operating within Brunei Darussalam. Residents seeking to trade cryptocurrencies may access international platforms, but they do so entirely at their own risk and outside of any local regulatory oversight or consumer protection.

**Banks' Stance:** Local commercial banks and financial institutions are generally cautious and may be reluctant to process transactions identified as related to cryptocurrencies, aligning with the broader restrictive stance from the central bank. This can make it difficult for individuals to fund or withdraw from international crypto platforms through local banking channels.

Brunei Darussalam Central Bank (BDCB), formerly known as the Monetary Authority of Brunei Darussalam (AMBD), is Brunei’s central bank and main financial regulator, responsible for monetary policy, currency issuance, and supervision/regulation of financial institutions; the claim should not state that AMBD is the current name or that it clearly already supervises virtual asset service providers as a fully established regime unless separately supported.

**AMBD AML/CFT Guidelines for Financial Institutions**: While often general, AMBD has clarified that these guidelines, issued under the AMLO 2011, apply to VASPs. These guidelines provide detailed instructions on implementing the requirements of the AMLO 2011.

**AMBD's Statement/Circulars on Virtual Assets**: AMBD has issued public statements (e.g., "Statement on Virtual Assets") clarifying that virtual asset activities and VASPs fall within the scope of regulated financial activities for AML/CFT purposes. These statements emphasize compliance with the AMLO 2011 and FATF Recommendations, specifically Recommendation 15 concerning virtual assets.

**Identification and Verification (ID&V) of Customers**:

Collecting and verifying the identity of natural persons (name, address, date of birth, nationality, unique identification number from an official document like passport or national identity card).

Collecting and verifying the identity of legal entities (name, legal form, proof of existence, powers that regulate the entity, address of registered office, directors, and beneficial owners).

Using reliable, independent source documents, data, or information to verify identity.

**Beneficial Ownership**: Identifying and taking reasonable measures to verify the identity of the beneficial owner(s) of customers, including understanding the ownership and control structure of legal persons and arrangements.

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

**Risk-Based Approach**: Applying a risk-based approach to CDD. This means:

**Simplified CDD (SCDD)**: Permissible for low-risk customers/transactions, but never when there's a suspicion of ML/TF.

**Enhanced CDD (EDD)**: Required for higher-risk customers, business relationships, or transactions (e.g., Politically Exposed Persons (PEPs), cross-border correspondent relationships, complex transactions, transactions with high-risk jurisdictions). EDD measures might include obtaining additional information on the customer, beneficial owner, source of funds/wealth, and the reasons for intended transactions.

**Ongoing Monitoring**: Regularly monitoring transactions and business relationships to ensure they are consistent with the VASP's knowledge of the customer, their business, and risk profile. This includes keeping customer information up-to-date.

**Obligation to Report**: VASPs are obligated to report any transaction (or attempted transaction) that they know, suspect, or have reasonable grounds to suspect is related to money laundering or terrorist financing.

**Reporting Body**: Reports must be submitted to the Brunei Financial Intelligence Unit (FIU), which operates within AMBD.

**No Tipping-Off**: VASPs and their employees are prohibited from disclosing to the customer or any third party that a STR has been, or will be, made.

**Customer Identification Records**: Copies of identity documents, verification data, and any information obtained during the CDD process.

**Transaction Records**: Details of all transactions, including sender and receiver information, virtual asset types, amounts, dates, and transaction identifiers (e.g., blockchain hashes).

**Business Correspondence**: Relevant correspondence with customers, including records relating to STRs submitted.

**Duration**: Records must be retained for at least **five (5) years** after the business relationship ends or after the date of the transaction. This ensures that records are available for audit, investigation, and analysis by competent authorities.

Implement robust internal AML/CFT policies, procedures, and controls.

Appoint a qualified Money Laundering Reporting Officer (MLRO).

Provide ongoing AML/CFT training to relevant employees.

Conduct independent audits of their AML/CFT programs.

Comply with the **"Travel Rule"** (FATF Recommendation 16 for wire transfers, extended to virtual assets), meaning they must obtain and retain required originator and beneficiary information for virtual asset transfers above a de minimis threshold, and transmit this information to the beneficiary institution.

**Anti-Money Laundering and Anti-Terrorism Financing Act (AMLAFTA), 2010 (as amended):** This is the cornerstone legislation. It imposes obligations on financial institutions (which, by definition or interpretation, would include VASPs once formally regulated or under general AML/CFT principles) to:

Conduct customer due diligence (CDD) and know-your-customer (KYC) procedures.

Monitor transactions for suspicious activities.

Report suspicious transactions (STRs) to the Financial Intelligence Unit (FIU) within the Autoriti Monetari Brunei Darussalam (AMBD).

Implement internal controls, policies, and training programs.

**Comply with UN Security Council Resolutions on targeted financial sanctions.**

Freeze assets of designated persons and entities.

*General reference for AMBD's regulatory oversight:* Autoriti Monetari Brunei Darussalam (AMBD)

**Anti-Terrorism Order (ATO), 2011:** This order provides the legal basis for identifying and freezing assets of individuals and entities involved in terrorism and terrorist financing, including those designated by the UN Security Council.

**Anti-Terrorism Order, 2011.** (Similar to AMLAFTA, official consolidated versions might be in government gazettes or legal databases not publicly accessible online in a single link, but its existence and principles are widely recognized in AMBD's regulatory guidance).

**Autoriti Monetari Brunei Darussalam (AMBD) Guidelines:** AMBD, as the central bank and financial regulator, issues directives, guidelines, and circulars to financial institutions concerning AML/CFT compliance, including sanctions. These often detail the implementation of the AMLAFTA and ATO.

AMBD regularly updates its **AML/CFT/PF Guidelines** and publishes circulars. These are usually found under the "Publications" or "Regulations" section of the AMBD website. As of now, specific crypto-focused AML/CFT guidelines are still emerging, but the general financial institution guidelines apply by extension.

AMBD Publications & Reports (Check here for current circulars and guidelines).

**Compliance Requirement:** Brunei, as a member of the United Nations, has a legal obligation to implement all UN Security Council Resolutions (UNSCRs) related to sanctions. This is domestically enforced through the AMLAFTA and ATO.

**Obligations for VASPs (and any financial entity):**

**Screening:** Regularly screen all customers (KYC) and transactions against UN sanctions lists (e.g., ISIL (Da'esh) and Al-Qaeda Sanctions List, DPRK Sanctions List, Iran Sanctions List, etc.).

**Asset Freezing:** Immediately freeze funds and other assets of individuals or entities designated by the UN Security Council.

**Prohibition:** Prohibit providing funds or economic resources, directly or indirectly, to designated persons or entities.

**Reporting:** Report any matches or attempts to circumvent sanctions to the FIU/AMBD.

UN sanctions committees maintain and update regime-specific listings, while the UN Security Council Consolidated List is the authoritative official list published by the UN Secretariat and updated based on committee decisions.

UN Security Council Sanctions Committees

**OFAC (U.S.) and EU Sanctions:**

**Compliance Requirement:** Brunei law does *not* directly mandate compliance with OFAC or EU sanctions for its domestic entities.

U.S. and EU sanctions have significant extraterritorial effects, and for VASPs that operate globally, interact with U.S. or EU persons/entities, or rely on U.S./EU financial infrastructure (even indirectly), aligning with OFAC and EU sanctions is generally a major commercial and risk‑management imperative. However, it is not an absolute ‘critical business necessity’ in every case: some VASPs that are primarily focused on non‑U.S./non‑EU markets and are subject to anti‑blocking or blocking regulations may face conflicting legal obligations, making full OFAC/EU alignment a strategic choice involving trade‑offs rather than a universal requirement.

**Secondary Sanctions:** Being cut off from the global financial system, including correspondent banking relationships.

**Reputational Damage:** Significant harm to credibility and trust.

**Legal Action:** Potential legal action in jurisdictions that enforce these sanctions if there is a nexus.

**Obligations for Global VASPs:** Prudent VASPs in Brunei, especially those aiming for international reach, will integrate OFAC's Specially Designated Nationals (SDN) list and EU sanctions lists into their screening processes, in addition to UN lists.

U.S. Department of the Treasury – OFAC

European External Action Service – Sanctions

**Mandatory Screening:** Against all UN Security Council Consolidated List and specific UN sanctions committee lists.

**Recommended Screening (for international operations):** Against OFAC's SDN List, EU Consolidated List of persons, groups and entities subject to EU financial sanctions, and potentially other significant national sanctions lists (e.g., UK's HM Treasury).

**Technology:** Utilizing robust blockchain analytics and sanctions screening software to identify addresses and entities linked to sanctioned individuals, organizations, or jurisdictions.

**Implicit Restrictions via Sanctions:** Transactions involving crypto assets to, from, or through sanctioned countries (e.g., North Korea, Iran, specific regions in Russia, Syria, Cuba, Venezuela - depending on the specific sanctions regime) or designated high-risk jurisdictions are restricted or prohibited.

**FATF High-Risk Jurisdictions:** Brunei's AML/CFT framework, aligning with FATF recommendations, requires enhanced due diligence for transactions involving jurisdictions identified by FATF as high-risk or under increased monitoring.

**AMBD's Risk Appetite:** The AMBD, like many regulators, has a cautious stance towards crypto. Transactions involving crypto, especially with certain high-risk geographies, would likely be scrutinized.

**Fines:** Substantial monetary penalties for both individuals and corporate bodies.

**Imprisonment:** Individuals found guilty of offences can face lengthy prison sentences.

**Loss of Licenses/Business:** Regulated entities (once VASPs are fully regulated) may face suspension or revocation of their operating licenses.

**Reputational Damage:** Significant harm to business reputation, making it difficult to operate locally and internationally.

There are **no specific licenses** for standalone cryptocurrency or digital asset custodians in Brunei.

If a traditional financial institution (e.g., a bank) were to offer digital asset custody services, it would likely be expected to operate under its existing licensing but would likely require specific consultation and approval from BDCB, and there would be an expectation to integrate such services within its existing risk management and compliance frameworks. However, BDCB has not explicitly outlined a process for this.

For entities not already licensed as financial institutions, offering digital asset custody is being actively monitored by the Brunei Central Bank (BDCB), which defines a clear regulatory boundary, requiring specific authorization for such activities.

**Segregation of Client Assets Rules:**

There are **no explicit rules or mandates** regarding the segregation of client digital assets for non-traditional financial entities operating as custodians.

For regulated financial institutions, general principles of trust law and fiduciary duties would apply to client assets held, but these are not specific to digital assets.

There are **no specific insurance or bonding requirements** for digital asset custodians in Brunei.

There are **no specific mandates or requirements** for the use of cold storage for digital assets.

Best practices in the industry universally recommend robust security measures, including cold storage, but these are not legally enforced in Brunei.

There is **no legal definition** for a "qualified custodian" specifically in the context of digital assets within Brunei's regulatory framework.

There is **no publicly announced or pending legislation** specifically addressing digital asset custody.

BDCB, like many central banks, continuously monitors developments in financial technology. While they may be studying international best practices (e.g., from FATF, IOSCO, other advanced jurisdictions), no concrete legislative proposals have been made public regarding custody.

**Anti-Money Laundering and Counter-Financing of Terrorism Order, 2011 (AMLCFTO, 2011):** This is the primary legislation for AML/CFT in Brunei. While it does not explicitly mention "cryptocurrency" or "digital assets," financial institutions and designated non-financial businesses and professions (DNFBPs) are subject to its provisions.

If activities involving digital assets were deemed to fall under the definition of "financial services" or "money or value transfer services" (MVTS) as per the FATF recommendations, then entities providing such services would be expected to comply with AML/CFT obligations, including customer due diligence (CDD), record-keeping, and suspicious transaction reporting (STR).

**Reference:** Anti-Money Laundering and Counter-Financing of Terrorism Order, 2011 (AMLCFTO, 2011) – While BDCB hosts general information, finding a direct URL for the full, updated text on their site can be challenging. It's often referenced in their AML/CFT guidelines.

BDCB's AML/CFT page generally discusses their role and framework: https://www.bdcb.gov.bn/index.php/supervision/aml-cft

**Example (from AMBD, predecessor to BDCB):** In 2018, AMBD issued an advisory warning the public about the risks associated with investing in virtual currencies. While this specific advisory might be archived, it reflects the consistent stance of the regulator.