Belarus -- AML/CFT Compliance Regulatory Overview

Belarus has a unique and relatively progressive regulatory framework for cryptocurrencies and virtual assets, primarily established through Presidential Decree No. 8 "On the Development of the Digital Economy". This decree legalized cryptocurrency activities for residents of the Hi-Tech Park (HTP) and set the stage for their regulation, including robust Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) requirements.

Here's a breakdown of the AML/KYC requirements for Cryptocurrency/Virtual Asset Service Providers (VASPs) in Belarus:

1. AML/CFT Legislation

The primary legislative acts governing AML/CFT for VASPs in Belarus are:

• Decree of the President of the Republic of Belarus No. 8 "On the Development of the Digital Economy" dated December 21, 2017 (as amended): This foundational decree legalizes and regulates activities involving digital tokens (cryptocurrencies) for Hi-Tech Park residents, including exchanges, initial coin offerings (ICOs), and other related services. It explicitly mandates that HTP residents engaged in these activities must comply with AML/CFT legislation.
• Law of the Republic of Belarus No. 165-Z "On Measures for Preventing the Legalization of Proceeds from Crime, Financing of Terrorist Activities and Financing the Proliferation of Weapons of Mass Destruction" dated June 30, 2014 (as amended): This is the overarching national AML/CFT law that applies to all financial institutions and designated non-financial businesses and professions (DNFBPs) in Belarus, including those operating under Decree No. 8 when conducting financial operations involving virtual assets. It outlines the general principles and specific obligations for AML/CFT compliance.
• Regulations and Rules issued by the Hi-Tech Park Administration: The HTP Administration, as the direct regulator of crypto activities, issues specific rules and instructions that elaborate on the AML/CFT requirements for its residents, ensuring compliance with both Decree No. 8 and the general AML law. These typically align with FATF recommendations.

Definition of VASP (in Belarusian context): While the term "VASP" might not be directly used in the legislation, Decree No. 8 regulates activities like the creation, placement, storage, sale, exchange, and other operations with digital tokens. Entities (residents of the Hi-Tech Park) performing these functions are de facto VASPs and are subject to the stipulated AML/CFT obligations.

2. Customer Due Diligence (CDD) Requirements

HTP residents engaged in virtual asset services are required to perform comprehensive CDD, including:

• Identification and Verification of Customers:
  • For Individuals: Obtaining and verifying name, date of birth, place of residence, citizenship, passport details (series, number, date of issue, issuing authority), and sometimes tax ID number. Verification must be based on reliable, independent source documents or data.
  • For Legal Entities: Obtaining and verifying legal name, registration number, legal form, address of incorporation, proof of existence, details of directors/managers, and beneficial ownership information.
• Identification of Beneficial Owners: VASP must identify and verify the identity of the beneficial owner(s) of the customer, regardless of the ownership structure. For legal entities, this means identifying individuals who ultimately own or control more than a certain percentage (e.g., 25%) of the entity, or who otherwise exercise control.
• Purpose and Intended Nature of Business Relationship: Understanding the customer's business activities, the purpose of their transactions, and the intended nature of the ongoing relationship.
• Ongoing Monitoring: Continuously monitoring the business relationship and transactions to ensure they are consistent with the VASP's knowledge of the customer, their business, and risk profile. This includes scrutinizing transactions for unusual patterns.
• Risk-Based Approach: VASPs must implement a risk-based approach to CDD. This means:
  • Simplified Due Diligence (SDD): May be applied in specific low-risk scenarios.
  • Enhanced Due Diligence (EDD): Must be applied to higher-risk situations, such as transactions involving Politically Exposed Persons (PEPs), customers from high-risk jurisdictions (as identified by FATF or national authorities), complex or unusually large transactions, or situations where there are suspicions of money laundering/terrorism financing. EDD involves obtaining additional information, conducting more rigorous verification, and requiring higher-level management approval.
• Source of Funds/Wealth: For high-risk clients or transactions, VASPs are expected to take reasonable measures to establish the source of funds or source of wealth.

3. Suspicious Transaction Reporting (STR)

HTP residents offering virtual asset services are obligated to report suspicious transactions to the financial intelligence unit (FIU) of Belarus.

• Reporting Obligation: Any transaction or attempted transaction that the VASP suspects to be related to money laundering, financing of terrorism, or financing the proliferation of weapons of mass destruction, regardless of the amount, must be reported.
• Reporting Authority: The reports are submitted to the Financial Monitoring Department of the State Control Committee of the Republic of Belarus.
• Timing: Reports must be made without delay, typically within 24-48 hours of forming a suspicion.
• No Tipping-Off: VASPs and their employees are prohibited from informing the customer or any third party that a suspicious transaction report has been or will be made.

4. Record-Keeping Obligations

VASPs must maintain comprehensive records for a specified period to assist in investigations and audits:

• Customer Identification Records: All documents and information obtained during the CDD process, including identity documents, beneficial ownership information, and risk assessments.
• Transaction Records: Details of all virtual asset transactions, including dates, types of assets, amounts, parties involved (senders and recipients), wallet addresses, and any relevant messages or references.
• Business Correspondence: Records of communications related to customer due diligence and transactions.
• Suspicious Transaction Reports: Copies of all STRs submitted, along with supporting documentation and internal decision-making processes.

Retention Period: Records must be retained for at least five years after the termination of the business relationship or the date of an occasional transaction.

5. Authority Overseeing Compliance

Compliance oversight for VASPs in Belarus is shared between two key authorities:

• Hi-Tech Park Administration (HTP):

  • Role: The HTP Administration is the primary direct regulator for companies operating within its jurisdiction, including those involved in virtual asset activities. It grants residency status, sets specific rules and requirements for crypto operations under Decree No. 8, and oversees their adherence to these rules, which encompass AML/CFT obligations. The HTP conducts audits and inspections of its residents.
  • Website: https://www.park.by/ (available in English)

• Financial Monitoring Department of the State Control Committee of the Republic of Belarus (FIU):

  • Role: This department functions as the national Financial Intelligence Unit (FIU). It is responsible for receiving, analyzing, and disseminating suspicious transaction reports (STRs) and other financial intelligence to law enforcement agencies. It also plays a role in developing national AML/CFT policy and coordinating with international bodies. While HTP administers specific crypto rules, the FMD receives all STRs.
  • Website: The Financial Monitoring Department is part of the State Control Committee.
    • State Control Committee: https://www.kgk.gov.by/ (The FMD's specific section might be under "Structure" or "Departments" on this site).

Summary

Belarus has established a regulated environment for cryptocurrency and virtual asset services, particularly for entities resident in the Hi-Tech Park. These VASPs are subject to comprehensive AML/KYC requirements aligned with international standards set by FATF. They must implement robust customer due diligence, report suspicious activities to the Financial Monitoring Department, and maintain detailed records. Compliance is primarily overseen by the Hi-Tech Park Administration, with the Financial Monitoring Department acting as the national FIU.

Disclaimer: This information is for general informational purposes only and does not constitute legal advice. For specific compliance guidance, it is recommended to consult with legal professionals specializing in Belarusian AML/CFT and virtual asset regulations.