Madagascar -- Travel Rule Implementation Regulatory Overview

Madagascar is currently on the Financial Action Task Force (FATF) grey list (officially referred to as "Jurisdictions under Increased Monitoring") since October 2021, indicating strategic deficiencies in its anti-money laundering and combating the financing of terrorism (AML/CFT) regime. This status strongly suggests that the country is still working to address fundamental deficiencies and is unlikely to have fully implemented more recent FATF recommendations, such as the Travel Rule for virtual assets (VA) and virtual asset service providers (VASPs).

Based on the publicly available information, particularly from FATF reports and follow-up assessments:

• Overall Status: Madagascar has made progress in some areas of its AML/CFT framework as required by the FATF Action Plan. However, the comprehensive regulation and supervision of Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs), including the implementation of the Travel Rule, is not yet effectively in place. Madagascar's Mutual Evaluation Report was published in 2018, prior to the significant updates to FATF Recommendation 15 and the issuance of the Interpretive Note on VAs/VASPs in June 2019, which introduced the Travel Rule. Subsequent Follow-Up Reports indicate that addressing risks associated with new technologies and developing a regulatory framework for virtual assets remains an area requiring significant work.

• Whether Adopted: The FATF Travel Rule requirements (which necessitate VASPs to obtain, hold, and transmit required originator and beneficiary information for virtual asset transfers) have not been formally adopted or effectively implemented within Madagascar's legal and regulatory framework for virtual assets. Madagascar's AML/CFT framework likely lacks the specific legislation or regulations necessary to govern VASPs and mandate Travel Rule compliance.

• Effective Date: Given the lack of formal adoption, there is no specific effective date for the FATF Travel Rule in Madagascar.

• Threshold Amounts: As the Travel Rule is not adopted, there are no established threshold amounts for its application in Madagascar.

• Which VASPs are Covered: Without specific legislation or regulations, there is no clear definition or coverage of VASPs for the purpose of the Travel Rule in Madagascar. The existing AML/CFT law may generally apply to financial institutions, but a specific framework for virtual asset service providers is absent or nascent.

• Technical Implementation Requirements: Since the Travel Rule is not implemented, there are no defined technical implementation requirements for VASPs in Madagascar.

• Penalties for Non-Compliance: Without specific laws or regulations governing the Travel Rule or defining VASP obligations in this regard, there are no specific penalties for non-compliance with the Travel Rule. Any penalties would fall under general AML/CFT legislation for unregistered financial activities, if virtual asset activities are deemed to fall under existing financial services definitions, which is often ambiguous without specific VA legislation.

References:

1. FATF Jurisdictions under Increased Monitoring (Grey List): Madagascar is listed here, indicating ongoing strategic deficiencies.
   • FATF Website - Jurisdictions under Increased Monitoring
2. FATF Mutual Evaluation Report for Madagascar (2018): This report precedes the Travel Rule guidance. While it assesses Recommendation 15, it does so under the pre-2019 framework. Subsequent follow-up reports (not always publicly available in full detail for all countries) would assess progress on the updated R.15.
   • FATF Website - Madagascar's Mutual Evaluation Report (2018) (You'll find the 2018 ME report and subsequent follow-up reports here, which would indicate the state of R.15 implementation).
3. FATF Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers (Updated 2021): This document details the Travel Rule requirements. Madagascar is expected to align its regulations with this guidance.
   • FATF Website - Guidance for VA and VASPs (Updated 2021)

In summary, Madagascar is in the early stages of addressing its AML/CFT deficiencies, and the implementation of the FATF Travel Rule for virtual assets is still an outstanding and likely unaddressed requirement within its current framework.