Remote VASP serving residents in Belarus

Presidential Decree No. 8 (2017) initially legalized cryptocurrencies and set a framework for activities like mining, exchange, and token creation in Belarus, but subsequent regulatory actions by Belarusian authorities have narrowed its scope by preapproving only 26 specific cryptocurrencies for processing by cryptobanks, imposing restrictions not present in the original decree.

HTP residency grants the right to engage in activities related to digital tokens, including their storage and transfer.

Applicants for HTP residency must submit a business plan, demonstrate a suitable business model, and comply with HTP's internal rules and oversight, including AML/CFT requirements.

HTP Oversight: The HTP administration reviews the business operations and internal policies of its residents. It is highly probable that during the application or ongoing supervision, they would require companies to demonstrate adequate risk management and operational controls for safeguarding client assets, which would typically include some form of asset segregation.

Exclusion from HTP residency: This is the most significant regulatory action against licensed entities.

Criminal prosecution: Against individuals or groups operating illegally (outside HTP's framework), engaging in fraud, or money laundering.

Regulator Name: Hi-Tech Park (HTP) Administration

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.

Identification and Verification of Customers:

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.

Risk-Based Approach: VASPs must implement a risk-based approach to CDD. This means:

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.

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.

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

Entity Targeted: WhiteBird LLC (the Belarusian legal entity associated with the WhiteBIT crypto exchange). Violation Type: Failure to comply with the requirements for Hi-Tech Park residency and the norms of Decree No. 8. While specific details are often not fully disclosed by HTP, such exclusions typically stem from operational deficiencies, non-compliance with AML/CFT standards, or failure to meet the requirements of the special legal regime. Penalty Amount: Loss of HTP residency (effectively, revocation of its operating license in Belarus). No specific monetary fine for the exclusion itself is usually reported. Outcome: WhiteBird LLC was excluded from the HTP. This led to WhiteBIT announcing the cessation of services for residents of Belarus as of March 2024.

Entity Targeted: Individuals and organized criminal groups operating unregistered crypto exchanges, engaging in investment fraud schemes involving crypto, or using crypto for money laundering. Violation Type: Illegal entrepreneurial activity (operating a crypto exchange without HTP registration), fraud, money laundering, theft of crypto assets. Penalty Amount: Varies greatly. These are criminal cases, leading to arrests, investigations, and potential imprisonment, confiscation of assets, and restitution orders. The "penalty amount" is not a fixed fine but relates to the scale of the illicit activity (e.g., millions of dollars laundered or stolen) and subsequent asset seizures. Outcome: Arrests, initiation of criminal proceedings, asset seizures (including crypto and traditional assets), and potential convictions with prison sentences.

Outcome: Arrests, initiation of criminal proceedings, asset seizures (including crypto and traditional assets), and potential convictions with prison sentences.