Kiribati -- AML/CFT Compliance Regulatory Overview

**Anti-Money Laundering and Counter-Terrorist Financing Act 2018 (as amended):** This is the core AML/CFT legislation. While it might not explicitly mention "virtual assets" or "stablecoins," financial institutions and designated non-financial businesses and professions (DNFBPs) are expected to report suspicious transactions. If stablecoin activities were deemed to fall under "financial services" broadly, they could be captured.

**Individuals:** Obtain and verify the customer's name, residential address, date of birth, and an identification number (e.g., passport, national ID card). Verification typically requires reliable, independent source documents or data.

**Legal Entities (Companies, Trusts):** Obtain and verify the legal name, legal form, proof of existence, powers that regulate and bind the legal person or arrangement, and the names of relevant persons holding senior management positions. Identification and verification of beneficial owners (those ultimately owning or controlling 25% or more of the entity) are mandatory.

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

**Source of Funds/Wealth:** For high-risk customers or transactions, obtaining information on the source of funds or wealth involved in the relationship or transaction.

**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, including, where necessary, the source of funds.

**Risk-Based Approach:** VASPs must apply a risk-based approach, meaning:

**Simplified Due Diligence (SDD):** May be applied in lower-risk situations, where specific conditions are met and approved by the FIU.

**Enhanced Due Diligence (EDD):** Must be applied in higher-risk situations, such as relationships with politically exposed persons (PEPs), cross-border correspondent relationships, or transactions involving high-risk jurisdictions or complex, unusual transactions. EDD includes more intensive verification, increased monitoring, and senior management approval.

**Obligation to Report:** VASPs must report any transaction (or attempted transaction) where they know, suspect, or have reasonable grounds to suspect that the transaction involves proceeds of criminal activity or relates to terrorist financing.

**Reporting Authority:** All STRs must be submitted to the **Financial Intelligence Unit of Kiribati (FIU Kiribati)**.

**No Tipping-Off:** VASPs and their employees are prohibited from disclosing to the customer or any third party that an STR has been filed or that an investigation is underway.

**Customer Identification Records:** All documents and information obtained during the CDD process (identification documents, beneficial ownership information, business relationship details).

**Transaction Records:** Records of all domestic and international transactions, including the amount, currency, date, and parties involved (originator and beneficiary information).

**Correspondence:** Records of all correspondence and analyses related to CDD, business relationships, and transactions.

**Financial Intelligence Unit of Kiribati (FIU Kiribati)**

The FIU is responsible for receiving, analysing, and disseminating suspicious transaction reports, as well as providing guidance and overseeing compliance by reporting entities.

**URL:** While the FIU Kiribati may not have a frequently updated standalone website, information regarding its operations and Kiribati's AML/CFT framework can often be found through the **Asia/Pacific Group on Money Laundering (APG)** website, which is the regional FATF-style body Kiribati belongs to.

**Regulatory Ambiguity:** The lack of specific VASP legislation means there can be ambiguity. VASPs should proactively engage with the FIU Kiribati to seek clarification on their obligations and how the existing framework applies to their specific business model.

**FATF Standards:** Kiribati is expected to align with FATF standards. This means VASPs should design their AML/CFT programs based on the global best practices outlined in the FATF Recommendations and guidance for virtual assets, even if not explicitly codified in Kiribati law yet.

**Travel Rule:** While not explicitly mentioned in Kiribati's 2017 Act, the FATF "Travel Rule" (Recommendation 16 for wire transfers, extended to virtual asset transfers) requires VASPs to obtain and transmit originator and beneficiary information for virtual asset transfers above a certain threshold. VASPs should be prepared to implement this.

**No specific classification exists.** Kiribati's current laws do not define or classify stablecoins as e-money, payment tokens, securities, or any other distinct category.

**Potential Interpretation (Highly Unlikely to be Applied):**

If a stablecoin were structured as a share in an underlying asset or an investment contract, it *could theoretically* fall under general securities provisions if Kiribati had a robust securities law (which it largely does not, beyond basic company registration).

If it functioned purely as a payment instrument, it *might* be broadly seen as a form of financial service, but there are no specific e-money regulations adapted for crypto.

**No specific reserve requirements** for stablecoins are mandated in Kiribati.

Any entity operating with a stablecoin would not be subject to any specific prudential requirements for reserves or collateral as there is no specific licensing or regulatory category for them.

**No specific stablecoin issuer license exists.**

**General Financial Services:** If an entity were to engage in activities that are broadly defined as "financial services" (e.g., taking deposits, issuing financial instruments) under Kiribati's general financial institutions laws, it *might* be required to obtain a license from the Ministry of Finance and Economic Development (MFED). However, it's highly improbable that a stablecoin issuer would fit neatly into existing licensing categories designed for traditional banks or insurance companies without specific legislative updates.

**Anti-Money Laundering (AML) / Counter-Terrorist Financing (CFT):** Entities dealing with virtual assets, including stablecoins, would likely fall under the purview of Kiribati's AML/CFT laws, enforced by the Financial Intelligence Unit (FIU). This would necessitate customer due diligence (CDD), transaction monitoring, and suspicious transaction reporting (STR).

**No statutory redemption rights** for stablecoin holders are guaranteed by Kiribati law.

Any redemption rights would be purely **contractual** between the stablecoin issuer and the holder, subject to the terms and conditions agreed upon by the parties. Consumer protection laws in Kiribati are generally basic.

**No specific rules whatsoever.** Given the absence of even basic stablecoin regulation, there are no provisions or prohibitions specifically targeting algorithmic stablecoins.

**Kiribati does not have its own central bank in the traditional sense** and primarily uses the Australian Dollar (AUD) as its official currency.

**No known initiatives for a Kiribati Central Bank Digital Currency (CBDC).** Therefore, there is no framework for interaction between stablecoins and a national CBDC. Any future developments in Australia regarding an AUD CBDC could indirectly influence financial practices in Kiribati.

**Ministry of Finance and Economic Development (MFED):**

This is the primary governmental body responsible for financial policy and oversight in Kiribati. Any future development in financial regulation, including for digital assets, would likely originate here.

**Website (General):** While a specific Kiribati government portal exists, detailed legislative pages are often not well-maintained or publicly available online.

Kiribati Government: https://www.president.gov.ki/ (Navigate to Ministries -> Ministry of Finance and Economic Development for general information, though specific legislation is rarely hosted there).

The FIU is responsible for implementing Kiribati's Anti-Money Laundering and Counter-Terrorist Financing framework, which is the most likely area where virtual assets *might* be addressed under existing law. Kiribati is a member of the Asia/Pacific Group on Money Laundering (APG), adhering to FATF standards.

A version of this act (or its predecessor) can often be found on legal databases for the Pacific region:

**Pacific Islands Legal Information Institute (PacLII):** Search for "Kiribati Anti-Money Laundering"

http://www.paclii.org/ki/legis/consol_act/aamlcfta2018281/ (This link might go directly to the AML/CFT Act 2018 if available on PacLII, otherwise, search the database).

**Financial Institutions Act (Specific Version Varies):**

This act governs the licensing and supervision of traditional financial institutions (like banks) in Kiribati. It is highly unlikely to mention stablecoins, but it's the general framework for financial sector regulation.

**PacLII:** Search for "Kiribati Financial Institutions Act"

http://www.paclii.org/ki/legis/consol_act/fia1993214/ (This is an older version, a newer one may exist, but it demonstrates the type of general financial legislation available on PacLII).