Bhutan -- Travel Rule Implementation Regulatory Overview

Bhutan, as a member of the Asia/Pacific Group on Money Laundering (APG), an FATF-Style Regional Body (FSRB), is committed to implementing the FATF Recommendations, including those pertaining to Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs).

While specific, standalone legislation explicitly titled "FATF Travel Rule Act" is not publicly available or widely disseminated, the principles of the Travel Rule are expected to be incorporated through the country's broader Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework, primarily overseen by the Royal Monetary Authority of Bhutan (RMA).

Here's a breakdown of the status based on available information and general expectations for an APG member:

1. Whether Adopted:

   • Bhutan is expected to have adopted the principles of the FATF Travel Rule (Recommendation 16) as part of its commitment to comply with FATF Standards. This means VASPs operating in Bhutan are required to collect and transmit originator and beneficiary information for virtual asset transfers.
   • The Anti-Money Laundering and Countering the Financing of Terrorism Act of Bhutan 2018 (AML/CFT Act 2018) provides the legislative foundation for AML/CFT compliance.
     • URL: https://www.rma.org.bt/aml/AML-CFT-ACT-2018.pdf
   • The Royal Monetary Authority (AML/CFT) Regulations 2020 further detail the obligations.
     • URL: https://www.rma.org.bt/aml/AML-CFT%20Regulations%202020.pdf
   • The RMA is the primary regulator and supervisor for financial institutions, and has also issued specific Guidelines on Virtual Asset Service Providers (VASPs), which would detail how the AML/CFT obligations, including the Travel Rule principles, apply to VASPs. These guidelines are crucial for understanding specific implementation details, though public access to the full, granular details of these specific VASP guidelines may require direct inquiry with the RMA or through licensed VASPs in Bhutan.

2. Effective Date:

   • While the AML/CFT Act 2018 is the foundational law, the specific requirements for VASPs, including the Travel Rule, would have become effective with the issuance of the RMA's VASP-specific regulations or guidelines. These typically follow the FATF's updated guidance on VAs/VASPs from 2019 onwards. A precise public effective date for the Travel Rule specifically within Bhutanese VASP regulations is not widely published, but it would align with the operationalization of VASP oversight by the RMA.

3. Threshold Amounts:

   • The FATF Travel Rule generally recommends thresholds of USD/EUR 1,000 for virtual asset transfers involving an unhosted wallet, and no de minimis threshold (i.e., USD/EUR 0) for transfers between two VASPs.
   • It is highly probable that Bhutan's VASP regulations adopt these standard FATF thresholds. Without specific public documentation from the RMA detailing these exact thresholds, it's safe to assume they would follow the FATF guidance.

4. Which VASPs are Covered:

   • The definition of VASPs in Bhutan's regulations is expected to align with the FATF definition. This typically includes:
     • Exchanges between virtual assets and fiat currencies.
     • Exchanges between one or more forms of virtual assets.
     • Transfer of virtual assets.
     • Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets.
     • Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.
   • Any entity performing these activities as a business within or into Bhutan would be covered.

5. Technical Implementation Requirements:

   • Bhutan's regulations, like most jurisdictions, are unlikely to prescribe a specific technical solution (e.g., TRISA, Shyft, CipherTrace Traveler). Instead, they would mandate the type of information to be collected and transmitted, and the method of transmission:
     • Originator Information: Name, physical address, unique identifier (e.g., national ID number), customer account number (if applicable), and optionally, date and place of birth.
     • Beneficiary Information: Name, physical address, unique identifier (e.g., national ID number), and customer account number (if applicable).
     • Transaction Information: VA type, amount, date and time of the transaction, and the transaction hash/identifier.
     • Secure and Immediate Transmission: Information must be sent securely and "immediately" or "concurrently" with the virtual asset transfer.
     • Record Keeping: VASPs must maintain records of this information for a specified period (typically 5-7 years).

6. Penalties for Non-Compliance:

   • The Anti-Money Laundering and Countering the Financing of Terrorism Act of Bhutan 2018 outlines penalties for non-compliance with AML/CFT obligations, which would extend to VASPs failing to implement the Travel Rule and other VASP-specific AML/CFT requirements.
   • Penalties can include:
     • Administrative fines: Substantial monetary penalties for institutions and individuals.
     • Suspension or revocation of operating licenses.
     • Imprisonment: For individuals found guilty of serious offenses related to money laundering or terrorist financing.
     • Reputational damage and increased scrutiny from regulators and international bodies.

Summary: While Bhutan is committed to implementing FATF standards, including the Travel Rule, the specific detailed regulations for VASPs, particularly concerning the Travel Rule, are primarily found in guidelines issued by the Royal Monetary Authority. These guidelines would elaborate on the application of the broader AML/CFT Act and Regulations to VASPs. For the most precise and up-to-date information, direct consultation with the Royal Monetary Authority of Bhutan or a legal professional specializing in Bhutanese financial regulations is recommended.