Maldives

**Pure Crypto-to-Crypto:** Currently, there is no specific license required from the MMA for a platform exclusively facilitating crypto-to-crypto trades. However, such entities would still be subject to general AML/CFT obligations if identified as VASPs under Maldivian law.

**Crypto-to-Fiat (or Fiat-to-Crypto):** If an exchange involves the exchange of fiat currency (Maldivian Rufiyaa - MVR or other fiat currencies) for virtual assets, or vice-versa, it could potentially fall under existing financial services regulations, such as those for **money services businesses** or **payment service providers**. This would require an appropriate license from the MMA for those traditional activities. The scope of these existing licenses might need to be interpreted or expanded to explicitly cover VA activities.

**Custody Providers:** Similar to exchanges, if a provider merely holds virtual assets (cold or hot storage) without engaging in other regulated financial activities (like fund management of traditional assets), there isn't a specific VA custody license. However, if the custody service is part of a broader financial service or if it involves managing client funds/assets that are then invested in traditional markets, existing licenses (e.g., for investment funds, trustees) might apply.

**Processing payments in MVR (or other fiat) for goods/services, with crypto merely as an underlying settlement layer:** This would likely require a **payment service provider license** from the MMA under the existing payment systems framework.

**Processing payments solely in crypto:** If a service exclusively processes payments in virtual assets without touching fiat currency in the Maldives, there isn't a specific license. Again, AML/CFT obligations would still apply.

**Capital Requirements:** There are no specific capital requirements for VASPs *as VASPs* yet. However, if a business falls under an existing financial license (e.g., payment service provider, money service business), then the capital requirements for *that specific license* would apply.

**AML/KYC (Anti-Money Laundering / Know Your Customer):** This is the most crucial requirement for any entity dealing with virtual assets in the Maldives, regardless of licensing. VASPs are expected to:

Implement robust KYC procedures for all customers.

Conduct ongoing customer due diligence.

Monitor transactions for suspicious activity.

Maintain records for a specified period.

Report suspicious transactions (STRs) to the Financial Intelligence Unit (FIU) of the Maldives Monetary Authority.

Appoint an AML Compliance Officer.

Adhere to the "Travel Rule" as per FATF guidance.

**Local Presence:** For any financial service that requires an MMA license (e.g., payment services), a physical local presence, typically in the form of a locally incorporated entity and local management, is usually mandatory. For purely crypto-related activities without a specific license, a local presence might not be legally mandated but is generally advisable for effective AML/CFT compliance and to engage with regulators.

**Cybersecurity & Data Protection:** While not specifically VA-centric, robust cybersecurity measures and compliance with data protection principles are expected for any financial service provider.

**For existing regulated activities:** If your VASP business model falls under an existing MMA license (e.g., payment service provider), you would follow the application process for that specific license. This typically involves submitting a detailed business plan, financial projections, governance structure, fit and proper assessments for key personnel, and demonstrating compliance with relevant regulations.

**For purely crypto activities:** For now, the focus would be on ensuring full compliance with the Maldivian AML/CFT Act and engaging proactively with the MMA and FIU regarding your operations and compliance framework.

**Maldives Monetary Authority (MMA):** The central bank and financial regulator.

*Note:* You may need to navigate their site to find specific circulars or advisories related to virtual assets, which they issue periodically. As of my last update, a comprehensive VA regulation page isn't explicitly linked on the main menu, but they address these issues within their broader regulatory oversight.

**Prevention of Money Laundering and Financing of Terrorism Act (No. 10/2014):** This is the core AML/CFT legislation in the Maldives. VASPs, even without specific licensing, are expected to comply with its provisions.

**Financial Action Task Force (FATF) Recommendations:** The MMA and the Maldivian FIU base their AML/CFT expectations for VASPs heavily on FATF standards, particularly Recommendation 15 and its Interpretive Note.

**Consult directly with the Maldives Monetary Authority (MMA)** to get the most up-to-date information and clarity on how your specific business model would be regulated.

**Engage local legal counsel in the Maldives** specializing in financial services and fintech to ensure full compliance and navigate any ambiguities in the current framework.

**Partial Ban/Conservative and Prohibitive:** The Maldives Monetary Authority (MMA) does not recognize cryptocurrencies as legal tender and has issued warnings against their use. The primary focus of existing legislation regarding virtual assets is on AML/CFT, rather than fostering innovation or licensing crypto businesses. There is no specific legislation to regulate virtual asset service providers (VASPs) or permit the operation of crypto exchanges.

The central bank and primary financial regulator of the Maldives.

Responsible for maintaining monetary stability, regulating financial institutions, and overseeing payment systems.

Has publicly stated that cryptocurrencies are not legal tender in the Maldives.

**Financial Intelligence Unit (FIU) of the Maldives**:

Operates under the Maldives Monetary Authority.

Responsible for receiving, analyzing, and disseminating financial intelligence related to money laundering and terrorist financing.

Plays a key role in implementing the AML/CFT framework, which now encompasses virtual assets.

**Website:** (Typically integrated within the MMA website, specific FIU separate URL might not exist)

Responsible for overall financial policy and economic development.

Involved in broader policy decisions that might eventually lead to a comprehensive virtual asset framework.

**Anti-Money Laundering and Countering the Financing of Terrorism Act (Law No. 10/2014)**:

**Date:** Passed in 2014, with subsequent amendments.

**Relevance:** This is the most crucial piece of legislation. It aligns the Maldives with international standards set by the Financial Action Task Force (FATF). Although it doesn't *regulate* crypto, it *acknowledges* virtual assets as a type of property that can be used for money laundering or terrorist financing. It places obligations on reporting entities (like banks and financial institutions) to identify, assess, and mitigate risks associated with virtual assets if encountered. It also defines "virtual asset" in line with FATF recommendations.

**URL:** While direct legislative portals vary, the Act can often be found via the Attorney General's Office or legal information portals of the Maldives. For instance, search results for "Anti-Money Laundering and Countering the Financing of Terrorism Act Maldives 2014" will lead to legislative documents.

*General reference for Maldivian laws (may require searching):* https://www.attorneygeneral.gov.mv/

**Maldives Monetary Authority Act (Law No. 6/2004)**:

**Date:** Passed in 2004, with subsequent amendments.

**Relevance:** This Act establishes the MMA and grants it the authority to regulate currency, financial institutions, and payment systems. It forms the legal basis for the MMA's stance that only the Maldivian Rufiyaa (MVR) is legal tender and its power to warn against unregulated financial instruments like cryptocurrencies.

**URL:** Similar to the AML/CFT Act, found on legal portals or the MMA's institutional documents.

**Discouraged and Unregulated:** The MMA has consistently warned the public against the risks associated with investing in, trading, or using cryptocurrencies. They are not recognized as legal tender, and therefore, transactions using them do not have legal backing in the Maldives.

There are no regulations for individuals to legally trade cryptocurrencies through local, licensed platforms. Any trading activities by Maldivian citizens would likely occur through international platforms, operating outside the Maldivian regulatory purview.

**Crypto Exchanges (Virtual Asset Service Providers - VASPs):**

**No Legal Framework for Operation:** There is currently no legal framework in place for licensing or regulating virtual asset service providers (VASPs) or cryptocurrency exchanges to operate within the Maldives.

Consequently, no domestic crypto exchanges are legally registered or permitted to offer services to the Maldivian public. Any such operation would be considered unlicensed and illegal under existing financial regulations.

The Maldives is yet to implement the comprehensive VASP registration and supervision requirements outlined by FATF for jurisdictions that choose to allow such services.

**No specific "custody license"**: The Maldives does not currently have a dedicated license type explicitly for "cryptocurrency custodian."

**VASP Registration/Licensing**: However, entities providing custodial services for virtual assets would likely fall under the definition of a **Virtual Asset Service Provider (VASP)** as defined by the AML/CFT Act and subsequent regulations. VASPs are subject to AML/CFT obligations and may require registration or licensing with the MMA/FIU.

The definition of a VASP, consistent with FATF standards, includes entities that conduct one or more of the following activities or operations for or on behalf of another natural or legal person:

Exchange between virtual assets and fiat currencies.

Exchange between one or more forms of virtual assets.

**Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets.** (This is where custody falls)

Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.

**No explicit mandates**: There are no specific regulatory mandates in the publicly available Maldivian virtual asset framework that explicitly require the segregation of client digital assets from the custodian's proprietary assets.

**General financial principles**: While not explicitly legislated for crypto, general good practice in financial services, and principles underlying the AML/CFT Act regarding risk management, would strongly suggest that custodians should segregate client assets. However, this is more of an industry best practice than a specific regulatory dictate for crypto in the Maldives at this stage.

**No explicit requirements**: There are currently no specific regulatory requirements for cryptocurrency custodians in the Maldives to hold insurance or bonding for potential losses (e.g., due to hacks, operational errors, or insolvency).

**No specific mandates**: The Maldivian regulatory framework does not include specific technical requirements or mandates for the use of cold storage (offline storage) for client digital assets. Custodians are expected to implement appropriate security measures, but the specifics of *how* they secure assets (e.g., hot vs. cold storage percentages) are not dictated by regulation.

**No specific definition**: The concept of a "qualified custodian" as seen in some jurisdictions (e.g., under the U.S. Investment Advisers Act) does not have a specific definition or regulatory framework within the Maldives' virtual asset laws.

Publicly available information from the Maldives Monetary Authority or the Maldivian government does not indicate any specific, dedicated custody legislation is currently pending or under active development.

However, as a member of the global financial community and subject to FATF recommendations, the Maldives is expected to continually review and update its AML/CFT framework, and potentially expand its virtual asset regulations beyond just AML/CFT in the future, especially as the FATF continues to evolve its guidance on VAs and VASPs. Any future updates would likely be announced by the MMA.

**Maldives Monetary Authority (MMA) Official Website:**

The primary source for all financial regulations in the Maldives. You would typically find acts, regulations, and directives here.

**Anti-Money Laundering and Countering the Financing of Terrorism Act (Act No. 10/2014, as amended):**

This is the foundational legislation. While a direct, stable URL for the latest consolidated version might be hard to pin down on the government's legal portal (which can be less user-friendly for direct links), searches on the MMA or the Attorney General's Office website would be where to look for the full text.

A common place for official acts would be the Attorney General's Office portal, but specific links are often volatile: https://www.agoffice.gov.mv/

You would need to search within the MMA or AGO websites for "AML/CFT Act" or "Virtual Assets." For example, the MMA website often publishes press releases or guidelines related to the Act's implementation for VASPs.

**Investment of Money:** An investor commits capital.

**Common Enterprise:** The investment is pooled with others, or the fortunes of investors are intertwined with the success of the issuer or a third party.

**Expectation of Profit:** The investor anticipates earning a return (e.g., capital appreciation, dividends, profit sharing).

**Derived Solely from the Efforts of Others:** The profits are expected to come primarily from the managerial or entrepreneurial efforts of the issuer or a third party, rather than the investor's own efforts.

An interest in an investment scheme.

Shares, units, bonds, debentures, or other similar instruments.

Rights to receive dividends, profit distribution, or participate in governance structures that grant control or influence over an entity.

**Investment Tokens (Security Tokens):** Tokens designed to represent ownership, debt, or other financial rights in an underlying asset or enterprise. This includes tokens that offer:

Equity ownership or voting rights in a company.

Rights to revenue streams from a project.

Debt obligations (e.g., tokenized bonds).

Any token marketed as an investment with an expectation of financial return from the efforts of others.

**Hybrid Tokens:** Tokens that initially have utility features but also grant holders rights or expectations of profit that could classify them as securities. The CMDA emphasizes that the classification can change over time based on how the token is marketed and used.

**Non-Fungible Tokens (NFTs):** While most NFTs might be considered collectibles, an NFT that bundles financial rights, fractionalized ownership of an asset with an expectation of appreciation, or provides a share in profits from an enterprise could be deemed a security.

**CMDA Approval:** The offering will require prior approval from the CMDA.

**Prospectus Requirements:** Issuers must prepare and register a detailed prospectus (or equivalent disclosure document) providing comprehensive information to potential investors, similar to traditional public offerings. This includes details about the issuer, the project, the token's features, risks, and use of proceeds.

**Disclosure and Transparency:** Ongoing disclosure obligations may apply post-offering.

**Licensing:** Entities involved in issuing or advising on such offerings may require specific licenses from the CMDA.

**Licensing:** The platform would need to be licensed by the CMDA.

**Market Integrity Rules:** Adherence to rules ensuring fair and orderly trading, prevention of market manipulation, and price transparency.

**Investor Protection:** Implementation of measures to protect investors, including robust KYC/AML procedures, secure custody solutions, and dispute resolution mechanisms.

**Reporting Obligations:** Regular reporting to the CMDA on trading activities.

**CMDA Enforcement Powers:** If an offering is deemed an unregistered security, the CMDA has the power to:

Impose administrative penalties and fines.

Refer cases for criminal prosecution under the Capital Market Development Act and Securities Act, which can include imprisonment for serious offenses.

Prohibit individuals or entities from participating in the capital market.

**MMA Enforcement Powers (related to AML/CFT):** The MMA has been more active in issuing advisories regarding virtual assets from an AML/CFT perspective. It can:

Issue public warnings against unregistered Virtual Asset Service Providers (VASPs).

Work with financial institutions to block transactions related to non-compliant entities.

Impose penalties on financial institutions for AML/CFT breaches related to virtual assets.

**CMDA Guidance Note on Regulation of Digital Assets and Digital Asset Service Providers (2021):**

*Note:* CMDA documents are sometimes directly provided via email upon request or available on their physical premises. A direct public URL for the full document is not consistently maintained on their website, but the information is derived from their official stance.

**CMDA Website (General Information):** https://www.cmda.gov.mv/

**Capital Market Development Act 2005 (Law No. 6/2005):**

*Note:* Maldivian laws are often found on government legal databases.

**Securities Act 2006 (Law No. 2/2006):**

**Maldives Monetary Authority (MMA) Advisories on Virtual Assets:**

The MMA frequently issues public notices and advisories regarding the risks of virtual assets and the need for AML/CFT compliance for VASPs.

**MMA Website (News & Press Releases):** https://www.mma.gov.mv/ (Look under "News" or "Press Releases" for "Virtual Assets," "Cryptocurrency," or "Digital Currency" advisories). For example, they have issued advisories against unregulated foreign VASPs.

**Prevention of Money Laundering and Financing of Terrorism Act (Act No. 10/2014) (PMLFTA):** This is the foundational law that outlines the obligations for financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs), which by extension, cover VASPs. It mandates customer due diligence (CDD), record-keeping, suspicious transaction reporting (STR), and compliance with international sanctions.

**Legal Reference:** Prevention of Money Laundering and Financing of Terrorism Act (Act No. 10/2014)

*While an official English translation may be sought directly from the Attorney General's Office or the Maldives Monetary Authority, its content aligns with FATF standards.*

A reference to the Maldivian legal portal where it may be found: Attorney General's Office - Acts and Regulations (You may need to search for "Money Laundering" or "Terrorism Financing" there).

**Regulations, Directives, and Guidelines by the Maldives Monetary Authority (MMA):** The MMA is the central bank and financial regulator, responsible for issuing specific regulations and guidelines for AML/CFT compliance, including those relevant to virtual assets.

**Legal Reference:** Maldives Monetary Authority (MMA) website for publications and regulations: MMA - Regulations and Directives

**Financial Intelligence Unit (FIU):** Housed within the MMA, the FIU is responsible for receiving and analyzing STRs/SARs and disseminating financial intelligence to law enforcement.

**Legal Reference:** MMA - Financial Intelligence Unit

**FATF Recommendations:** The Maldives' framework is built upon the Financial Action Task Force (FATF) Recommendations, particularly Recommendation 15 on New Technologies, which requires countries to regulate VASPs for AML/CFT purposes, including sanctions compliance.

**Legal Reference:** FATF Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers (Updated 2023)

**Mandatory Obligation:** As a member of the United Nations, the Maldives is legally obligated to implement sanctions resolutions adopted by the UN Security Council (UNSC). These resolutions target individuals and entities involved in terrorism financing, proliferation financing, and other threats to international peace and security.

**Asset Freezing:** The PMLFTA requires financial institutions (including VASPs) to immediately freeze the assets of individuals and entities designated by the UNSC. This includes funds held in virtual asset wallets.

**Prohibition on Making Funds/Economic Resources Available:** VASPs are prohibited from directly or indirectly making any funds or economic resources (including virtual assets) available to designated persons or entities.

**Screening:** VASPs must continuously screen their customers (both at onboarding and on an ongoing basis) against the UN sanctions lists.

**Reporting:** VASPs are required to report any hit or potential hit against UN sanctions lists to the FIU and relevant authorities.

**Legal Reference:** The implementation of UN Security Council Resolutions is mandated under the PMLFTA. Specific resolutions can be found on the UN website: UN Security Council Sanctions Committees

**Not Directly Legally Binding (for Maldives-only entities):** While OFAC (U.S. Department of the Treasury's Office of Foreign Assets Control) and EU sanctions are not directly legally binding on Maldivian entities operating *solely* within the Maldives and not involving US/EU persons or jurisdictions, they are **critically important** for practical and reputational reasons.

**Correspondent Banking and De-risking:** Maldivian financial institutions, including those dealing with VASPs, rely heavily on correspondent banking relationships with international banks (many of which are in the US or EU). Failure to comply with OFAC or EU sanctions can lead to these international banks terminating relationships, effectively cutting off access to the global financial system ("de-risking").

**International Transactions:** Any VASP facilitating transactions with individuals, entities, or jurisdictions subject to OFAC or EU sanctions, or using services from US/EU-based blockchain infrastructure providers, wallets, or exchanges, would be directly exposed to these sanctions.

**Best Practice:** Adhering to OFAC and EU sanctions lists (e.g., Specially Designated Nationals and Blocked Persons List - SDN List) is a widely recognized best practice for global AML/CFT compliance, even for jurisdictions not directly subject to them.

**Screening:** Maldivian VASPs, especially those with international operations or ambitions, are expected to screen their customers against OFAC and EU sanctions lists as part of their risk management and enhanced due diligence processes.

**Legal Reference:** While not Maldivian law, adherence is driven by international financial practice and FATF's risk-based approach.

OFAC Sanctions Programs and Information

**Mandatory:** VASPs in the Maldives must implement robust systems and procedures for screening customers, beneficial owners, and transactions against relevant sanctions lists (UN, and practically OFAC/EU).

**Ongoing Monitoring:** Screening is not a one-time event; it requires continuous monitoring of existing customers and transactions for any changes in sanctions status.

**Technology:** VASPs should leverage technology to automate and enhance their screening processes, ensuring accuracy and efficiency.

**Due Diligence:** Enhanced due diligence must be applied to high-risk customers, politically exposed persons (PEPs), and transactions involving high-risk jurisdictions, as identified by the VASP's risk assessment.

**Risk-Based Approach:** The Maldives does not typically impose outright blanket bans on crypto transactions with specific countries (beyond UN sanctions). Instead, its AML/CFT framework mandates a risk-based approach.

**High-Risk Jurisdictions:** VASPs are required to identify and assess the risks associated with customers and transactions originating from or destined for high-risk jurisdictions (those identified by FATF, or under international scrutiny for AML/CFT deficiencies). Enhanced due diligence and potentially outright refusal of service may be necessary for such jurisdictions.

**FATF High-Risk and Monitored Jurisdictions:** VASPs should consult FATF's lists of "High-Risk Jurisdictions subject to a Call for Action" and "Jurisdictions under Increased Monitoring" to inform their risk assessments.

**Legal Reference:** FATF - High-Risk Jurisdictions subject to a Call for Action

FATF - Jurisdictions under Increased Monitoring

**Fines:** Significant monetary penalties for individuals and corporate entities.

**Imprisonment:** For serious offenses or repeated violations by individuals.

**Revocation or Suspension of License:** For VASPs or other regulated entities, non-compliance can lead to the loss of their operating license.

**Reputational Damage:** Beyond legal penalties, non-compliance can severely damage a VASP's reputation and ability to operate within the international financial system.

**Comply with Registration/Licensing Requirements:** Obtain any necessary licenses or registrations from the MMA or other relevant authorities.

**Implement a Robust AML/CFT Program:** Including a risk assessment, internal controls, and independent audits.

**Conduct Customer Due Diligence (CDD):** Identify and verify customers and beneficial owners, and conduct ongoing monitoring.

**Perform Sanctions Screening:** Regularly screen all customers and transactions against UN, and practically, OFAC and EU sanctions lists.

**Comply with the FATF "Travel Rule":** Collect and transmit required originator and beneficiary information for virtual asset transfers above a certain threshold.

**Report Suspicious Transactions (STRs):** Report any suspected money laundering or terrorism financing activities, including sanctions evasion attempts, to the FIU.

**Maintain Records:** Keep all relevant records for a minimum period as required by law.

**Provide Training:** Ensure staff are adequately trained on AML/CFT and sanctions compliance.

**Regulator Name:** Maldives Monetary Authority (MMA)

**Entity Targeted:** General Public / Unlicensed Operators (not specific named entities)

**Violation Type:** While not a "violation" in the enforcement sense against an entity, the MMA's stance is that cryptocurrencies are **not legal tender** in the Maldives and that they **do not license or regulate** virtual asset service providers (VASPs). They primarily warn about the risks associated with investing in or using cryptocurrencies, including fraud, volatility, and lack of consumer protection.

**Penalty Amount:** N/A (No fines or penalties have been levied against specific crypto entities by the MMA in this period).

**Date:** Ongoing, with several public statements and advisories issued over the past few years.

**Outcome:** The outcome of these advisories is to deter the use and proliferation of unregulated cryptocurrencies within the Maldives and to manage public expectations regarding their legality and safety.

**MMA's Consistent Position:** The Maldives Monetary Authority has repeatedly stated that cryptocurrencies are not recognized as legal tender in the Maldives. They also do not provide licenses or regulatory oversight for any cryptocurrency-related activities or businesses operating within the country.

**Public Advisories:** The MMA has issued warnings to the public about the inherent risks of cryptocurrencies, including price volatility, cybersecurity risks, potential for fraud, and the absence of consumer protection. These advisories are the primary "action" taken by the regulator concerning crypto.

**Focus on AML/CFT:** While there isn't a specific crypto regulatory framework, the Maldives, as a member of the Asia/Pacific Group on Money Laundering (APG), is working to strengthen its Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) regime. This includes addressing virtual assets in line with FATF recommendations, but this is more about developing future regulations rather than current enforcement actions against existing crypto businesses.

**Lack of Licensed Entities:** Since no crypto businesses are licensed by the MMA, there are no regulated entities for the MMA to "enforce" against in the traditional sense (e.g., for non-compliance with licensing conditions or specific crypto-related regulations). Any potential criminal activity involving crypto would fall under general criminal law enforcement by the police, rather than specific financial regulatory enforcement.

**MMA's Official Statement on Cryptocurrencies (2022, but reflects consistent stance):**

Maldives Monetary Authority - Public Awareness on Virtual Assets (Cryptocurrencies)

**News Articles Reporting MMA's Warnings (e.g., from 2021-2023):**

While specific news articles can be ephemeral, here's an example of the recurring nature of these warnings:

Sun Online - MMA cautions public against cryptocurrency investments (February 2022)

The Edition - MMA advises public to be cautious of cryptocurrency investments (August 2021)