Remote VASP serving residents in Dominican Republic

Ley No. 155-17 contra el Lavado de Activos y el Financiamiento del Terrorismo (Law No. 155-17 Against Money Laundering and Terrorism Financing), enacted in June 2017.

This law defines "obligated parties" (sujetos obligados) which include a broad range of financial and non-financial businesses and professions. While it doesn't explicitly name "virtual asset service providers," entities dealing with virtual assets in a professional capacity (e.g., exchanges, custodians, transfer services) are likely to be interpreted as falling under its scope due to the nature of the financial services they provide or facilitate.

Resolución R-BC-004-2022 de la Junta Monetaria (Monetary Board Resolution R-BC-004-2022): This resolution, while not a VASP specific regulation, is crucial context. It forbids financial entities regulated by the Superintendencia de Bancos (SIB) from engaging with virtual assets, cryptocurrencies, or crypto assets. This means traditional banks cannot offer VASP services.

Identification and Verification:

Individuals: Obtaining and verifying identity (name, date of birth, address, nationality, official identification number/document like passport or cédula).

Legal Entities: Obtaining and verifying legal name, address, articles of incorporation, legal form, proof of existence, powers of attorney, and the identity of beneficial owners and directors.

Beneficial Ownership: Identifying and verifying the identity of the ultimate natural person(s) who own or control the customer, or the person on whose behalf a transaction is being conducted.

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

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

Simplified Due Diligence (SDD): Permitted for low-risk customers or transactions.

Enhanced Due Diligence (EDD): Required for high-risk customers, such as Politically Exposed Persons (PEPs), customers from high-risk jurisdictions, or complex and unusual transactions.

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.

FATF Travel Rule Expectation: As the DR is a member of GAFILAT (the FATF-style regional body), VASPs are expected to eventually comply with the FATF's "Travel Rule," which requires VASPs to obtain and transmit originator and beneficiary information for virtual asset transfers above a certain threshold. While not explicitly codified in DR law for VASPs yet, it's a global standard.

Identify Suspicious Activity: Establish internal policies and procedures to detect and identify unusual or suspicious transactions.

Report to FIU: Report any transaction or attempted transaction suspected of being related to money laundering or terrorism financing to the Unidad de Análisis Financiero (UAF), the Dominican Republic's Financial Intelligence Unit.

No Tipping-Off: Prohibit informing the customer or any third party that a STR has been filed (no "tipping-off").

Designated Compliance Officer: Appoint a compliance officer responsible for AML/CFT matters, including STR filings.

Customer Identification Data: All documents and information obtained during the CDD process.

Transaction Records: Details of all transactions, including amounts, dates, types, and parties involved.

Retention Period: Records must be retained for a minimum period of five (5) years after the termination of the business relationship or the date of the transaction.

Unidad de Análisis Financiero (UAF) - Financial Analysis Unit:

UN Security Council Resolutions (UNSC Resolutions):

The Dominican Republic is a member of the United Nations and, as such, is obligated to implement sanctions resolutions adopted by the UNSC. These resolutions target individuals, entities, and countries involved in terrorism, proliferation of weapons of mass destruction, and other threats to international peace and security.

Compliance Requirement: Dominican entities, including VASPs, must freeze assets and prevent transactions with individuals and entities appearing on the UN Security Council Consolidated List.

U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) Sanctions:

OFAC sanctions have significant extra-territorial reach. While primarily targeting U.S. persons (citizens, residents, entities, and their foreign branches), non-U.S. entities can also face severe penalties if their activities involve:

U.S. financial systems (e.g., correspondent banking, dollar-denominated transactions).

Crypto-Specific OFAC Sanctions: OFAC has explicitly sanctioned cryptocurrency mixers (e.g., Tornado Cash, Blender.io), exchanges (e.g., Garantex, Suex, Chatex), and wallets/entities associated with ransomware groups (e.g., Lazarus Group, Conti, Hive).

European Union (EU) Sanctions:

EU sanctions apply to all EU persons and entities, regardless of where they operate, and to non-EU entities conducting business within the EU. While their direct extra-territorial impact on a purely DR-based VASP is less pronounced than OFAC's, any VASP with an EU nexus (e.g., serving EU customers, having EU beneficial owners, or using EU-based services) must comply.

Warnings and Advisories: The Central Bank of the Dominican Republic (Banco Central de la República Dominicana - BCRD) has repeatedly issued public statements and communications warning about the risks associated with cryptocurrencies, stating that they are not legal tender, are not backed by any government or central bank, and are subject to high volatility and lack of regulation.

Prohibition for Regulated Entities: Financial institutions regulated by the BCRD and the Superintendency of Banks (Superintendencia de Bancos - SB) are generally prohibited from dealing in or offering services related to cryptocurrencies.

Absence of a Specific Licensing Framework: Unlike some other jurisdictions, the Dominican Republic does not currently have a specific regulatory framework for the licensing and supervision of cryptocurrency exchanges or related businesses. This means there isn't a specific set of crypto regulations for regulators to enforce against these entities.

Comunicado del Banco Central sobre las criptomonedas (March 25, 2021): This is one of the most definitive statements from the Central Bank.

Regulator Name: Banco Central de la República Dominicana (BCRD - Central Bank of the Dominican Republic)