Centralized exchange in Grenada
Order-book exchange that takes custody of user assets and matches trades between users.
CEX is conditionally permitted in Grenada with a local entity, subject to AML obligations and high licensing burden.
Verdict Details
- Permitted
- conditional
- Local entity required
- Yes
- Licensing burden
- High
- Last updated
- 2026-07-13
AML Obligations
- License required under the Virtual Asset Business Act (VABA) 2020/2023 from GARFIN for exchange (fiat-crypto & crypto-crypto), custody, transfer, and payment services.
- Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) for high-risk customers required under the Proceeds of Crime Act and FIU VASP Guidance.
- Suspicious Transaction Reporting (STRs) to the FIU Grenada for any suspicious activity.
- Travel Rule obligations: for transfers above USD/EUR 1,000 (or equivalent), full originator and beneficiary information must be collected, held, and transmitted; for transfers below that threshold, originator name + account/reference and beneficiary name + account/reference must be collected and held.
- Information retention of at least seven years from the date of transfer for all travel-rule data (Section 16(2) of VABA).
- Appointment of a designated AML/CFT Compliance Officer.
- Ongoing staff training and risk assessment frameworks required.
- Record-keeping of all transactions and customer identification data.
- Risk-based transaction monitoring program must be implemented.
- Declining transfers where travel-rule information cannot be obtained, with a report to the FIU (Section 16(4) of VABA).
Key Restrictions
- Local entity required — applicant must be a company incorporated or established in Grenada.
- Directors or senior officers must be ordinarily resident in Grenada (or alternative arrangements acceptable to the Authority).
- Minimum capital requirements apply (amounts to be prescribed by the FSA via regulations/directives — must consult FSA directly).
- Fit and Proper Test applies to directors and senior officers.
- License must cover each regulated activity — exchange, custody, transfer, payment services all individually captured under VABA licensing categories.
Key Risks
- Capital requirements not yet publicly prescribed in specific amounts — uncertainty until FSA publishes regulations or directives.
- No explicit statutory mandate for custody asset segregation or insurance/bonding for client digital assets — best practice only, leaving potential gap in investor protection.
- Very limited public enforcement history — regulatory posture is being established but actual enforcement practice is untested, creating compliance uncertainty.
- Penalties for non-compliance include fines up to EC$250,000 (~USD $92,500) and/or imprisonment up to 3 years under VABA Section 34; directors/officers personally liable under Section 35.
- Travel Rule compliance requires technical infrastructure (e.g., TRP protocols) which may be operationally complex for smaller operators.
Evidence
This verdict synthesizes the following facts. Each fact links to its primary source(s).
Grenada Financial Services Authority (FSA): The competent authority responsible for licensing, supervision, and enforcement of the Virtual Asset Business Act.
Grenada Financial Intelligence Unit (FIU): Responsible for anti-money laundering and combating the financing of terrorism (AML/CFT) supervision of virtual asset businesses.
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.
Transfer of virtual assets.
Virtual asset businesses are designated as "reporting entities" under Grenada's Proceeds of Crime Act and other AML/CFT legislation.
Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) procedures (Know Your Customer - KYC).
Risk-based approach to assessing and mitigating money laundering and terrorism financing risks.
Record-keeping of transactions and customer identification data.
Monitoring of transactions for suspicious activities.
Reporting of suspicious transactions (STRs) to the FIU.
Appointment of a designated AML/CFT Compliance Officer.
Ongoing training for employees.
An applicant must be a company incorporated or established in Grenada. This requires a legal entity registered within the jurisdiction.
Fit and Proper Test:
Financial Intelligence Unit (FIU) Grenada: This is the primary authority responsible for supervising and enforcing AML/CFT compliance for VASPs.
Proceeds of Crime Act, Cap. 254: This act defines money laundering offenses and establishes the framework for combating financial crime.
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.
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:
Suspicious Transaction Reporting (STR) to the FIU.
All transfers above USD/EUR 1,000 (or equivalent): Both originator and beneficiary information must be collected, held, and transmitted.
All transfers below USD/EUR 1,000 (or equivalent): Originator name and account number (or unique transaction reference) and beneficiary name and account number (or unique transaction reference) must be collected and held. This information should be readily available and immediately provided to authorities upon request. Full Travel Rule data is required if there are suspicions of money laundering or terrorist financing, irrespective of the threshold.
Information Collection: VASPs must "obtain and hold the originator information and beneficiary information" as per FATF R.16. This includes names, physical addresses, unique transaction identifiers, and virtual asset wallet addresses for both originator and beneficiary.
Information Retention: Section 16(2) mandates that VASPs must "store the information obtained and held under subsection (1) for a period of not less than seven years from the date of the virtual asset transfer."
Information Accessibility: Section 16(3) requires VASPs to "make the information obtained and held... available to the Authority upon request." The Authority refers to the Grenada Authority for the Regulation of Financial Institutions (GARFIN).
Declining Transfers: Section 16(4) states that "Where a virtual asset service provider is unable to comply with subsection (1), the virtual asset service provider shall decline the virtual asset transfer and make a report to the Financial Intelligence Unit."
Risk-Based Approach: While the Act doesn't specify particular software or protocols, compliance implies the need for robust systems capable of securely collecting, storing, and transmitting this data, potentially utilizing Travel Rule solutions (e.g., TRP, OpenVASP, Sygna, Travel Rule Universal Protocol - TRUP) for inter-VASP communication. VASPs are expected to implement a risk-based approach to assess and mitigate ML/TF risks.
Virtual Asset Business Act, 2023 (Act No. 36 of 2023):
Virtual Asset Business Act (VABA), 2020: This Act provides the framework for the regulation of virtual asset businesses in Grenada, requiring them to be licensed by GARFIN and comply with AML/CFT requirements.
Require Registration/Licensing: All entities operating as Virtual Asset Service Providers (VASPs) in Grenada are legally required to be licensed by GARFIN and comply with AML/CFT regulations enforced by both GARFIN and the FIU.
Monitor and Investigate: The FIU, in particular, would investigate suspicious transactions involving virtual assets as part of its mandate to combat money laundering and terrorist financing. Non-compliance could lead to investigations, orders to cease operations, and potentially sanctions.
Issue Public Warnings: GARFIN and the FIU have issued general warnings to the public about the risks associated with unregistered virtual asset businesses and the importance of due diligence.
The Act mandates that a licensee must, at all times, maintain sufficient capital to carry on its virtual asset business.
General Offences (Section 34): "A person who contravenes a provision of this Act or the Regulations commits an offence and where no specific penalty is provided, is liable on summary conviction to a fine not exceeding EC$250,000 (approximately USD $92,500) or imprisonment for a term not exceeding 3 years, or both."
Offences by Body Corporate (Section 35): Where an offence is committed by a body corporate, and it's proven that a director, manager, secretary, or other similar officer consented or connived in the commission of the offence, they are also deemed to have committed the offence and liable to the same penalties.
Verdict Attribution
- Source:
- AI-Generated · Unreviewed
- AI synthesized:
- 2026-07-13 (deepseek-chat)
- Last updated:
- 2026-07-13
- Confidence:
- medium
This verdict was produced by an AI model from the underlying facts. Confirm with counsel before relying on it for material decisions.
Conditional — a centralized exchange can operate in Grenada if it is locally incorporated, licensed under the Virtual Asset Business Act (VABA) by GARFIN, maintains adequate capital, passes fit-and-proper requirements for directors, and complies with comprehensive AML/CFT obligations including FATF-compliant Travel Rule requirements.
Questions this verdict aims to answer
- What exchange / VASP license applies?
- What custody segregation rules apply to user assets?
- What market-conduct and listing rules apply?
- What travel-rule obligations apply on withdrawals?