On-shore VASP in Saint Kitts and Nevis

Requirement: Any entity engaging in a "virtual assets business" must be licensed by the Financial Services Regulatory Commission (FSRC). "Custody of virtual assets or instruments enabling control over virtual assets" is specifically defined as a virtual assets business.

Section 3: Defines "virtual assets business" to include "custody of virtual assets or instruments enabling control over virtual assets."

Section 4: Mandates that "A person shall not carry on a virtual assets business in or from Saint Christopher and Nevis unless that person holds a licence granted by the Commission under this Act."

Section 6-10: Outline the application process, required information, and grounds for refusal.

Mandate: Licensees are explicitly required to segregate client virtual assets from their own proprietary assets.

Section 17(1): "A licensee shall hold virtual assets belonging to its customers in separate accounts from the licensee’s own assets."

Section 17(2): "A licensee shall designate customer property as such and ensure that customer property is not commingled with the licensee’s own property."

Section 17(3): Further states that customer virtual assets "shall not be made available to creditors of the licensee, nor shall it be subject to liquidation, bankruptcy, or any similar proceedings against the licensee."

Mandate: Licensees are required to maintain insurance coverage or a bond for the full market value of the virtual assets they hold in custody.

Section 18(1): "A licensee shall, at all times, maintain insurance coverage or a bond for the full market value of the virtual assets under its custody or control."

Section 19(1): "A licensee shall implement appropriate security measures to protect virtual assets under its custody or control from theft, loss or unauthorised access."

Section 19(3): Specifies that the security measures must cover "custody of private keys" and "access control," strongly implying secure offline storage for private keys.

Requirements: Comprehensive Know Your Customer (KYC) procedures, transaction monitoring, suspicious activity reporting (SARs), appointment of an AML Compliance Officer, staff training, and record-keeping.

However, if the exchange facilitates conversion between virtual assets and fiat currency (e.g., XCD, USD), or accepts fiat deposits/withdrawals, it would likely be considered a Money Services Business (MSB).

For a Money Services Business License, there are specific capital requirements, typically involving a minimum paid-up capital and/or a bond. (Details would be in the MSB Act or accompanying regulations, usually requiring a minimum capital of XCD 100,000 or similar).

Money Services Business Act, 2000 (as amended): This act governs businesses that transmit or convert money.

Technical Implementation Requirements:

Store Information: Securely store the collected information for a minimum period (typically 5-7 years, as per general AML/CFT requirements).

Compliance Program: Establish an AML/CFT compliance program, appoint a compliance officer, and conduct regular training for staff.

Penalties for Non-Compliance:

Virtual Asset Business Act, 2020: While a direct, stable public URL from the Saint Kitts and Nevis government gazette is often hard to find, the Act can typically be sourced via the Financial Services Regulatory Commission (FSRC) or through legal databases. The FSRC is the primary regulatory body.

Anti-Money Laundering Act (2020 Revised Edition): This Act, along with its regulations, provides the overarching AML/CFT framework that VASPs must comply with.