Maldives -- Travel Rule Implementation Regulatory Overview

The Maldives has indeed taken steps to implement the FATF Travel Rule (Recommendation 16). The Maldives Monetary Authority (MMA), the central bank and financial regulator, has issued specific regulations to address Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs).

Here's a breakdown of the status:

1. Adoption and Effective Date

• Adopted: Yes, the Maldives has adopted the FATF Travel Rule through the Regulation on Virtual Asset Service Providers (VASPs) issued by the Maldives Monetary Authority (MMA).
• Effective Date: The VASP Regulation was approved by the MMA Board on 1st December 2022 and officially came into force on 1st January 2023. This regulation mandates VASPs to comply with AML/CFT obligations, including those related to the Travel Rule.

2. Threshold Amounts

• The Travel Rule in the Maldives applies to transactions involving virtual assets that exceed a specific threshold.
• Threshold: Transactions equal to or greater than MVR 15,000 (Maldivian Rufiyaa) or its equivalent in USD 1,000.
• For transactions below this threshold, VASPs are still required to monitor for suspicious activities and report them to the Financial Intelligence Unit (FIU).

3. Which VASPs Are Covered

The MMA's VASP Regulation defines and covers entities that conduct the following activities 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.
• Transfer of virtual assets.
• Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets.
• Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.

This broad definition aims to capture all relevant entities providing services related to virtual assets, consistent with FATF guidance.

4. Technical Implementation Requirements

VASPs operating in the Maldives are required to implement robust technical and operational procedures to comply with the Travel Rule. This includes:

• Collection of Required Information: For any VA transfer equal to or exceeding the threshold, VASPs must obtain and hold the following accurate and meaningful information:
  • Originator Information:
    • Name of the originator.
    • Originator's wallet address (if applicable).
    • Originator's physical address or unique customer identification number, or date and place of birth, or national identity number (e.g., passport number, ID card number).
  • Beneficiary Information:
    • Name of the beneficiary.
    • Beneficiary's wallet address (if applicable).
    • Beneficiary's unique customer identification number, or physical address, or date and place of birth, or national identity number (e.g., passport number, ID card number).
• Transmission of Information: The originator VASP must transmit the required information to the beneficiary VASP immediately and securely with the VA transfer.
• Secure Record-Keeping: VASPs must maintain records of all collected information for at least five years, and these records must be readily available to the MMA or FIU upon request.
• Reporting: VASPs are required to file Suspicious Transaction Reports (STRs) to the Financial Intelligence Unit (FIU) in cases where they suspect money laundering or terrorist financing, regardless of the transaction amount.

5. Penalties for Non-Compliance

Non-compliance with the VASP Regulation and the broader Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) framework can lead to severe penalties, as outlined in:

• Prevention of Money Laundering and Financing of Terrorism Act (Act No. 10/2014): This overarching AML/CFT law provides for penalties including:
  • Fines.
  • Imprisonment.
  • Forfeiture of assets.
  • Restrictions on business operations.
• Maldives Monetary Authority Act (Act No. 5/2014) and the VASP Regulation: The MMA has powers to enforce its regulations, which can include:
  • Imposing administrative penalties (e.g., monetary fines).
  • Issuing cease and desist orders.
  • Revocation or suspension of VASP licenses.
  • Imposing additional supervisory requirements.

The specific penalties would depend on the nature and severity of the violation.

References and Further Information:

• Maldives Monetary Authority (MMA) VASP Regulation: While a direct English PDF link to the full regulation is not consistently available on the MMA's public site, the MMA's press releases and official announcements confirm its issuance and content. You can typically find related announcements on the MMA website:
  • Maldives Monetary Authority Website (Look for "Publications" or "Announcements" sections for VASP-related news).
• Prevention of Money Laundering and Financing of Terrorism Act (Act No. 10/2014): This is the primary AML/CFT legislation.
  • Attorney General's Office - National Legislative Database (Dhivehi) (You might need to search for the Act number in Dhivehi).
• Financial Intelligence Unit (FIU) Maldives: The FIU issues guidance and handles STRs.
  • Financial Intelligence Unit Maldives

The Maldives, through the MMA and FIU, has made a clear commitment to aligning its regulatory framework for virtual assets with international FATF standards, including the Travel Rule.