Crypto-funded debit card in Kiribati

Registration, Not Licensing (for Crypto-specific activities): Kiribati currently operates on a de facto registration regime under its AML/CTF laws for virtual asset activities, rather than a specific licensing regime. This means that entities dealing with virtual assets are primarily required to comply with AML/CTF obligations and register with the FIU (if they fall under the definition of an "accountable institution"), rather than obtaining a bespoke crypto-specific license.

General Business Licensing: All businesses operating in Kiribati, regardless of their sector, must still undergo general business registration and licensing with the Registrar of Companies and comply with general business laws.

Kiribati Financial Intelligence Unit (FIU): Responsible for enforcing the AML/CTF Act, receiving suspicious transaction reports, and providing guidance on AML/CTF compliance.

Bank of Kiribati: The central bank of Kiribati. While not directly regulating VASPs, it has overall oversight of the financial system and could issue directives if virtual asset activities significantly impact financial stability or traditional banking services.

Likely Treatment: Would most likely be considered a "money or value transfer service" or a "virtual asset service provider" (VASP) under the scope of the AML/CTF Act. This would trigger obligations as an "accountable institution."

Likely Treatment: Very high probability of being classified as "money or value transfer services" under the AML/CTF Act, especially if they facilitate the transfer of value using virtual assets.

Specific Crypto Capital: There are no specific minimum capital requirements defined for virtual asset service providers in Kiribati.

AML/KYC Requirements: This is the most crucial aspect.

Customer Due Diligence (CDD): Identifying and verifying the identity of customers, including beneficial owners.

Ongoing Monitoring: Monitoring business relationships and transactions.

Record-Keeping: Maintaining records of transactions and customer data for a specified period.

Suspicious Transaction Reporting (STR): Reporting suspicious activities to the Kiribati FIU.

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.

Identification and Verification:

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.

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.

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.

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

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.

Classification of Stablecoins:

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.

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.

Nascent Regulatory Environment: Kiribati is a small island nation with a developing financial sector. Its regulatory frameworks for emerging technologies like cryptocurrency are either nascent or non-existent. There is no specific legislation or dedicated body for crypto regulation in place.

Limited Crypto Activity: The level of cryptocurrency adoption and activity within Kiribati is generally very low compared to larger economies, meaning fewer potential targets for enforcement.

The Bank of Kiribati (BoK): The central bank responsible for monetary policy and financial system stability.

The Kiribati Financial Intelligence Unit (KFIU): Deals with anti-money laundering (AML) and countering the financing of terrorism (CFT).