Crypto ATM / kiosk operator in Kyrgyzstan

Law of the Kyrgyz Republic on Combating the Financing of Terrorism and Legalization (Laundering) of Criminal Proceeds (No. 87, dated July 25, 2011, with subsequent amendments). This law establishes the legal and organizational framework for AML/CFT, defines the obligations of reporting entities, and outlines the role of the financial intelligence unit.

For individuals: Full name, date and place of birth, citizenship, residential address, identification document details (e.g., passport, national ID number). Verification through reliable, independent sources (e.g., government-issued documents, utility bills).

Beneficial Ownership Identification: VASPs must identify and take reasonable measures to verify the identity of the beneficial owner(s) of the customer, including those who ultimately own or control the customer, or the person on whose behalf a transaction is being conducted. Thresholds (e.g., 25% ownership or control) typically apply.

Risk-Based Approach: VASPs must adopt a risk-based approach to CDD. This means applying enhanced due diligence (EDD) for higher-risk customers (e.g., Politically Exposed Persons (PEPs), customers from high-risk jurisdictions, complex structures, large transactions) and simplified due diligence (SDD) for lower-risk scenarios where permitted.

Obligation to Report: If a VASP has grounds to suspect that funds or other property, regardless of the amount, are related to the financing of terrorism or legalization (laundering) of criminal proceeds, it must immediately report such suspicions.

No Tipping-Off: VASPs and their employees are prohibited from disclosing to the customer or third parties that a suspicious transaction report (STR) has been filed, or that an investigation into money laundering or terrorist financing is being conducted.

Retention Period: Records must generally be kept for a minimum period of five years from the date of the transaction or the termination of the business relationship.

Ongoing Monitoring: Continuously monitoring the business relationship and transactions to ensure that they are consistent with the VASP's knowledge of the customer, their business, and risk profile, including, where necessary, the source of funds.

Purpose and Intended Nature of Business Relationship: Understanding the purpose and intended nature of the business relationship (e.g., why the customer is using virtual assets, expected transaction volumes and types).

The State Service for Financial Intelligence (SSFI) under the Ministry of Finance of the Kyrgyz Republic.

Evolving Landscape: The regulatory landscape for virtual assets is constantly evolving globally and in Kyrgyzstan. VASPs should monitor for any new specific laws, regulations, or guidance related to cryptocurrencies issued by the SSFI or the National Bank of the Kyrgyz Republic.

National Bank of the Kyrgyz Republic (NBKR): While the SSFI is the primary AML/CFT supervisor, the NBKR also plays a crucial role in maintaining financial stability and overseeing the financial sector. The NBKR has historically issued warnings regarding the risks of cryptocurrencies. Any future comprehensive regulatory framework for VASPs might involve the NBKR, especially if virtual assets are classified as financial instruments or securities.

Key Legislation: The primary law is the Law of the Kyrgyz Republic No. 200 "On the Turnover of Virtual Assets" dated August 10, 2022. This law provides the legal basis for the regulation of virtual assets and designates VASPs as obliged entities for AML/CFT purposes.

Effective Date: The Law No. 200 became effective shortly after its promulgation in August 2022. This integration means VASPs are now subject to the broader AML/CFT legislation of Kyrgyzstan, including reporting requirements.

Exchange between virtual assets and fiat currencies.

FATF Standard Threshold: The FATF Travel Rule generally applies to virtual asset transfers (transactions) exceeding USD/EUR 1,000 (or its equivalent in virtual assets) for cross-border transfers and USD/EUR 1,000 (or its equivalent) if the transaction is domestic and not part of a pre-existing business relationship where the customer has been verified. For unhosted wallets, the guidance usually suggests due diligence for transactions above a certain threshold (e.g., USD/EUR 1,000), but the Travel Rule itself focuses on VASP-to-VASP transfers.

Core Requirement: VASPs in Kyrgyzstan are required to obtain, hold, and transmit required originator (sender) and beneficiary (receiver) information for virtual asset transfers that meet the specified thresholds.

Originator Information: Name, account number (or unique transaction identifier), physical address, national identity number, customer identification number, or date and place of birth.

Beneficiary Information: Name, account number (or unique transaction identifier).

Implementation: VASPs are expected to adopt robust technical solutions and protocols (e.g., using Travel Rule solution providers like TRISA, Sygna, Veriscope, etc.) to securely transmit this information to other VASPs involved in a transaction.

Record-keeping: VASPs must maintain records of all required information for a period specified by national AML/CFT laws (typically 5-7 years).

Administrative Fines: Significant monetary penalties for legal entities and responsible officials.

Evidence fact kg.aml.potential-penalties-suspension-or-revocation-of-licenses not found (may have been renamed).

Regulator Name: National Bank of the Kyrgyz Republic (NBKR)

Entity Targeted: The general public, financial institutions, and potential investors. Violation Type: N/A (warnings are preventative, not punitive). The NBKR warns against the risks associated with cryptocurrency, including high volatility, fraud, and the lack of legal tender status. They also emphasize that transactions using crypto are not regulated under Kyrgyz law, except for a specific license requirement for crypto-exchange activities. Penalty Amount: N/A (no direct penalty for warnings).

Entity Targeted: Organized groups and individuals operating illegal crypto mining farms. Violation Type: Illegal electricity consumption (theft), illegal entrepreneurship, potential tax evasion. Penalty Amount: Varies. Typically involves confiscation of mining equipment, imposition of fines for stolen electricity, and initiation of criminal proceedings. Exact financial penalties for each individual operation are often not publicly detailed but can amount to millions of KGS in damages to the energy grid. Arrests and potential imprisonment for organizers.

Entity Targeted: Organizers and promoters of the "S-Group" financial pyramid scheme. Violation Type: Fraud, establishment of a financial pyramid, illegal enrichment. The scheme falsely promised high returns from investments in various "projects," including crypto trading. Penalty Amount: No single "fine" amount specified as it's a criminal case. The goal is asset seizure and restitution to victims. The estimated damage to victims was substantial, reaching billions of KGS. Organizers face criminal charges, which can lead to imprisonment.