Grenada -- AML/CFT Compliance Regulatory Overview

**Financial Intelligence Unit (FIU) Grenada:** This is the primary authority responsible for supervising and enforcing AML/CFT compliance for VASPs.

**Grenada Financial Services Authority (FSASG):** While the FSASG regulates traditional financial services, its direct involvement in licensing or supervising dedicated crypto custody businesses (beyond potential overlap if the assets are deemed securities or fall under other regulated activities) is less clear compared to the FIU's role in AML/CFT.

**Proceeds of Crime Act, Cap. 254:** This act defines money laundering offenses and establishes the framework for combating financial crime.

**Terrorism Act, Cap. 317:** Addresses financing of terrorism.

**Financial Intelligence Unit Act, Cap. 109A:** Establishes the FIU and its powers, including oversight of financial institutions and designated non-financial businesses and professions (DNFBPs), which now explicitly include VASPs.

**Guidance for Virtual Asset Service Providers (VASPs):** The FIU has issued guidance notes to clarify the application of AML/CFT requirements to VASPs, in line with Financial Action Task Force (FATF) recommendations. This guidance is the most relevant document for crypto businesses.

**VASP Definition:** The FIU's guidance defines a VASP consistent with FATF recommendations, which includes any natural or legal person who, as a business, conducts one or more of the following activities for or on behalf of another natural or legal person:

Exchange between virtual assets and fiat currencies.

Exchange between one or more forms of virtual assets.

**Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets.** (This explicitly covers custody.)

Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.

**Registration/Notification:** VASPs are generally required to register with the FIU and/or notify the FIU of their operations, ensuring compliance with AML/CFT obligations. This is not a specific "license" but a requirement to operate legally under the AML/CFT regime.

**AML/CFT Program:** VASPs must implement a comprehensive AML/CFT program, including:

Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) for high-risk customers.

Suspicious Transaction Reporting (STR) to the FIU.

Appointment of a Compliance Officer.

**Specific References:** The FIU's website often hosts its "Guidance for Virtual Asset Service Providers" or similar documents, which would detail these requirements. Unfortunately, direct links to specific guidance documents can change or require navigation within the site. It is advisable to consult the official FIU Grenada website (fiu.gov.gd) under "Publications" or "Guidance" sections.

**Not explicitly detailed in VASP AML/CFT Guidance:** While general AML/CFT guidance focuses on identifying clients, monitoring transactions, and reporting, it typically *does not* go into the specifics of prudential requirements like asset segregation.

**Implied Best Practice:** Reputable custodians, regardless of explicit regulatory mandate, typically segregate client assets from their operational funds as a matter of good governance, security, and to protect client interests in case of insolvency. However, there is no specific Grenadian regulation *mandating* this for crypto custodians under the current AML/CFT framework.

**No explicit mandate:** Grenada's current AML/CFT framework for VASPs does not explicitly require custodians to carry specific insurance or bonding to cover potential losses of client digital assets.

This is typically a prudential requirement found in dedicated financial services legislation for regulated entities (banks, securities firms), which is not yet fully applied to standalone crypto custodians in Grenada.

**No specific mandate:** There are no explicit Grenadian regulations that mandate specific technical requirements for the storage of digital assets, such as the use of cold storage (offline storage).

**Implied Security:** While not mandated, using secure storage solutions (including cold storage) would be considered a fundamental security practice for any responsible custodian and would implicitly fall under general "sound business practices" and risk management expected of a VASP.

**No specific definition:** The concept of a "qualified custodian" as defined by bodies like the US SEC (e.g., banks, registered broker-dealers, trust companies) does not have a direct, equivalent legal definition within Grenadian legislation specifically for digital assets.

**Focus on AML Compliance:** In Grenada, the primary focus for an entity providing custodial services for digital assets is to be recognized as a VASP and to comply with all associated AML/CFT obligations overseen by the FIU.

**No publicly available information on specific custody legislation:** As of the last review, there is no widely publicized or pending legislation in Grenada that specifically introduces a dedicated licensing regime for digital asset custody services with detailed prudential requirements (like asset segregation, insurance, or cold storage mandates) beyond the existing VASP AML/CFT framework.

**Dynamic Nature:** However, the regulatory landscape for digital assets is rapidly evolving globally. Grenada, as a member of international bodies and recipient of FATF recommendations, may introduce more specific regulations in the future. It's always advisable to check the latest pronouncements from the FIU and FSASG.

**The Anti-Terrorism Act (Cap 18A of the Continuous Revised Laws of Grenada):** This Act provides the legal basis for implementing UN Security Council Resolutions (UNSCRs) related to terrorism financing and proliferation financing, including the freezing of assets of designated persons and entities. It compels financial institutions (which would include VASPs by extension or interpretation) to report suspicious transactions and property related to terrorism.

Anti-Terrorism Act (2002, amended 2011) - Grenada Legal Information Network (unofficial, but widely cited): (Note: Official government gazettes or direct links to Attorney General's Chambers are preferred if available, but Grenada Legal Information Network is a common resource).

**The Proceeds of Crime Act (Cap 253 of the Continuous Revised Laws of Grenada):** This Act primarily deals with money laundering and the seizure/confiscation of proceeds of crime. While not directly a sanctions law, it underpins the AML framework that obliges financial institutions to conduct due diligence, including sanctions screening.

Proceeds of Crime Act (2002, amended 2011) - Grenada Legal Information Network:

**The Financial Intelligence Unit Act (Cap 108 of the Continuous Revised Laws of Grenada):** This Act establishes the Financial Intelligence Unit (FIU) of Grenada, which is the central agency for receiving, analyzing, and disseminating suspicious transaction reports (STRs) and other financial information related to money laundering and terrorist financing. The FIU provides guidance to reporting entities on their AML/CFT obligations, including sanctions compliance.

Financial Intelligence Unit Act (2007) - Grenada Legal Information Network:

**FIU Grenada Website:** https://www.fiugrenada.org/ (This is the primary source for guidance and updates for reporting entities in Grenada).

**UN Sanctions (Mandatory):** As a UN member state, Grenada is legally obligated to implement all UN Security Council Resolutions. This means VASPs must screen against the **UN Security Council Consolidated List** of individuals and entities subject to asset freezes, travel bans, and arms embargoes.

**UN Security Council Consolidated List:** https://www.un.org/sc/sub/sanctions/un-sc-consolidated-list

**OFAC Sanctions (Highly Recommended/De Facto Standard):** While U.S. Office of Foreign Assets Control (OFAC) sanctions are primarily binding on U.S. persons and entities, they have significant extra-territorial reach due to the global nature of finance and the U.S. dollar's role. Any Grenadian VASP engaging in transactions with U.S. persons, using U.S. dollar stablecoins, or interacting with U.S.-regulated financial infrastructure will be indirectly subject to OFAC sanctions. Most international financial institutions and payment processors (even crypto-related ones) will require screening against OFAC lists. Failure to comply can lead to being cut off from crucial financial services.

**OFAC Specially Designated Nationals (SDN) List:** https://home.treasury.gov/policy-issues/financial-sanctions/specially-designated-nationals-and-blocked-persons-list-sdn-human-readable-lists

**EU Sanctions (Highly Recommended):** Similar to OFAC, EU sanctions are primarily binding on EU persons and entities. However, given the significant economic ties with Europe, VASPs in Grenada dealing with EU customers, partners, or using EU-domiciled services should also screen against the **EU Consolidated List**.

**EU Sanctions Map (Consolidated List):** https://sanctionsmap.eu/#/main

**Customer Due Diligence (CDD) and Know Your Customer (KYC):** Collecting and verifying identity information of customers.

**Sanctions Screening:** Screening all customers (individuals and entities), beneficial owners, and, where feasible, transaction counterparties against relevant sanctions lists at onboarding and on an ongoing basis. This includes real-time screening of transactions for sanctioned addresses or entities.

**Risk-Based Approach:** Developing a robust risk assessment methodology to identify, assess, and mitigate risks associated with different customers, products, services, and geographic regions.

**Transaction Monitoring:** Monitoring transactions for unusual patterns, amounts, or destinations that could indicate sanctions evasion.

**Asset Freezing:** Immediately freezing funds, virtual assets, or other assets owned or controlled by sanctioned individuals or entities upon identification.

**Reporting Obligations:** Reporting sanctions hits, suspicious transactions (STRs), and frozen assets to the FIU Grenada promptly.

**Record-Keeping:** Maintaining records of CDD, transactions, and sanctions screening for a specified period (typically 5-7 years).

**Screen Against Mandatory Lists:** Primarily the UN Security Council Consolidated List.

**Screen Against De Facto International Lists:** OFAC SDN List, EU Consolidated List, and potentially the UK Sanctions List, are essential for managing international risk and maintaining correspondent relationships.

**Scope of Screening:** Screening should cover:

All new and existing customers (individuals and legal entities).

Beneficial owners of legal entities.

Key personnel (e.g., directors, senior management).

IP addresses and other location data to identify sanctioned jurisdictions.

**Frequency:** Screening should occur during customer onboarding, before facilitating transactions (especially high-risk ones), and periodically thereafter to catch any new designations. Automated screening tools are best practice.

**Virtual Asset Addresses:** While not explicitly on sanctions lists, crypto analytics tools are crucial for identifying addresses linked to sanctioned entities, ransomware, terrorist groups, or darknet markets, which would trigger STRs.

**UN, OFAC, and EU Sanctioned Jurisdictions:** Grenadian VASPs must prohibit transactions with or services to countries subject to comprehensive sanctions (e.g., Cuba, Iran, North Korea, Syria, specific regions of Ukraine/Russia subject to comprehensive sanctions).

Geo-blocking IP addresses from sanctioned regions.

Rejecting transactions originating from or destined for identified sanctioned addresses/entities, regardless of the user's apparent location.

Enhanced due diligence for high-risk jurisdictions.

**Grenada-Specific Geographic Restrictions:** Grenada does not impose its own comprehensive geographic sanctions beyond those it implements under UN mandates. However, the FIU Grenada may issue guidance on high-risk jurisdictions for AML/CFT purposes.

**Imprisonment:** Individuals found guilty of terrorism financing or related offenses can face lengthy prison sentences (e.g., up to 25 years).

**Fines:** Significant monetary penalties for individuals and corporations failing to comply with reporting or asset-freezing obligations.

**Asset Forfeiture:** Assets linked to terrorism or sanctions violations can be seized and forfeited.

**Under the Proceeds of Crime Act:**

**Imprisonment:** For money laundering offenses, individuals can face substantial prison terms.

**Fines:** Significant monetary fines for individuals and legal entities.

**Confiscation:** Proceeds of crime can be confiscated.

**Under the Financial Intelligence Unit Act:**

Fines for non-compliance with reporting obligations (e.g., failure to submit STRs).

**Regulatory Sanctions:** Beyond criminal penalties, the relevant regulatory authority (e.g., GARFIN or the FIU) can impose administrative penalties, revoke licenses (if a licensing regime is in place), issue public reprimands, and take other enforcement actions.

**Reputational Damage:** Non-compliance can lead to severe reputational damage, loss of partnerships, and exclusion from international financial networks.

**No explicit classification:** Grenada's existing laws do not explicitly define or classify stablecoins as e-money, payment tokens, or securities.

**Likely "Virtual Assets":** Most commonly, stablecoins would be classified as "Virtual Assets" (VAs) under the **Money Laundering and Terrorist Financing (Prevention and Control) Act** and its accompanying regulations, which aim to align with the Financial Action Task Force (FATF) Recommendations on virtual assets and Virtual Asset Service Providers (VASPs). This broad classification primarily triggers AML/CFT obligations.

**Money Laundering and Terrorist Financing (Prevention and Control) Act** (Grenada) - While specific versions may vary, the FIU Grenada website would host relevant acts. (General search: `fiu.gov.gd/legislation`)

FATF Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers (VASPs): https://www.fatf-gafi.org/media/fatf/documents/recommendations/RBA-VA-VASPs.pdf (Grenada, as a FATF member, is expected to implement these).

**Potential "E-money" or "Payment System":** If a stablecoin were designed to function purely as a medium of exchange pegged to a fiat currency, and widely accepted for payments, the ECCB or Grenada's financial regulators (like GARFIN, the Grenada Authority for the Regulation of Financial Institutions) might consider it a form of e-money or a component of a payment system, which would attract a higher level of prudential regulation. However, explicit definitions for stablecoins in this context are absent.

**No specific stablecoin reserve requirements:** As there is no specific stablecoin legislation, there are no explicit reserve requirements mandated for private stablecoin issuers in Grenada.

**Prudential requirements via sandbox:** If an entity were to issue a stablecoin and operate under the **ECCB Fintech Regulatory Sandbox**, the ECCB would likely impose prudential requirements, including robust reserve backing, independent audits, segregation of client funds, and capital adequacy, similar to traditional financial institutions.

**ECCB Fintech Regulatory Sandbox Framework:** Available on the ECCB website. (General search: `eccb-centralbank.org/p/fintech-regulatory-sandbox`)

**No specific "stablecoin issuer license":** There is no designated license category for stablecoin issuers.

**VASP Registration/Licensing:** If an entity provides services related to stablecoins (e.g., exchange, transfer, custody), it would likely be deemed a "Virtual Asset Service Provider" (VASP) under Grenada's AML/CFT framework and would be required to register with or be licensed by the Grenada Financial Intelligence Unit (FIU) or another designated authority, subject to the scope of the local AML/CFT laws.

**FIU Grenada:** https://www.fiu.gov.gd/ (Responsible for AML/CFT oversight and VASP registration if specified in local regulations).

**ECCB Licensing/Sandbox:** For any significant operation that might resemble banking, e-money issuance, or payment systems, the issuer would likely need to engage with the ECCB. The **ECCB Fintech Regulatory Sandbox** is the most probable avenue for licensed experimentation and operation for innovative financial products, including potentially stablecoins, within the ECCU. Any private stablecoin intending to circulate widely as a payment instrument would likely require explicit approval or licensing from the ECCB.

**ECCB Fintech Regulatory Sandbox Framework:** https://www.eccb-centralbank.org/p/fintech-regulatory-sandbox

**No specific statutory redemption rights:** In the absence of specific stablecoin regulation, there are no statutory redemption rights explicitly defined for stablecoin holders in Grenada.

**Contractual & General Consumer Protection:** Redemption rights would primarily be governed by the terms and conditions set by the stablecoin issuer. General consumer protection laws would apply, but specific mechanisms for crypto assets are not outlined.

**Sandbox Conditions:** Within the ECCB Sandbox, clear and robust redemption mechanisms (e.g., 1:1 redemption for fiat) would be a mandatory condition for approval to ensure consumer protection and stability.

**No specific rules whatsoever:** Given the nascent stage of stablecoin regulation, there are absolutely no specific rules or prohibitions regarding algorithmic stablecoins in Grenada or the ECCB framework.

**High Risk/Skepticism:** Due to the inherent instability risks associated with algorithmic stablecoins, any proposal for such a product would likely face extreme scrutiny and skepticism from the ECCB and Grenadian regulators, making approval highly unlikely under current conditions. They would likely fall under the broader "virtual asset" classification but would struggle to meet any prudential or stability requirements if considered for broader use.

**Significant Interaction:** This is a crucial area of interaction. The **Eastern Caribbean Central Bank (ECCB)** has already launched and implemented **DCash**, its own retail Central Bank Digital Currency (CBDC), across the ECCU, including Grenada.

**Monetary Sovereignty:** The existence and successful rollout of DCash mean that the ECCB is actively involved in the digital currency space. Any private stablecoin seeking to function as a general payment instrument within Grenada would be viewed in the context of DCash and the ECCB's role in maintaining monetary and financial stability.

**Competitive Landscape & Oversight:** The ECCB would likely scrutinize private stablecoins that could potentially compete with or undermine the monetary sovereignty provided by DCash. While the ECCB encourages innovation through its sandbox, private stablecoins that aim for widespread adoption as a currency substitute would likely require rigorous oversight and potentially face significant regulatory hurdles to ensure they do not disrupt the financial system or compromise the integrity of the currency union.