Remote VASP serving residents in Qatar

Rule 2.1.3(1) of the FSRU states: "A Firm must not undertake a Financial Service or other activity relating to a Virtual Asset."

The QFCRA Glossary defines "Virtual Asset" broadly as "any digital representation of value that can be digitally traded or transferred and used for payment or investment purposes, but does not include digital representations of fiat currencies, securities and other financial assets that are already covered by the QFCRA’s regulatory framework."

Current Status: There are no specific licenses for dedicated cryptocurrency custody businesses in Qatar. This is because the QFCRA prohibits firms from engaging in activities related to Virtual Assets, as detailed above.

Exceptions/Nuances: The prohibition explicitly excludes "digital representations of fiat currencies, securities and other financial assets that are already covered by the QFCRA’s regulatory framework." This means that if a tokenized security (e.g., a security issued on a blockchain) is regulated as a traditional security under QFCRA rules, then a licensed firm within the QFC could potentially custody such a tokenized security under its existing securities custody license. However, this is distinct from general cryptocurrency custody.

Law No. (20) of 2019 on Combating Money Laundering and Terrorist Financing: This is the foundational law establishing the AML/CFT framework, defining offenses, obligations for reporting entities, and the powers of regulatory and law enforcement bodies. It aligns Qatar's framework with the latest FATF Recommendations.

Identification and Verification of Customers:

Beneficial Ownership Identification: Identify and verify the identity of the beneficial owner(s) – any natural person(s) who ultimately own or control 25% or more of the legal person, or on whose behalf a transaction is being conducted.

Source of Funds and Source of Wealth: For high-risk customers or transactions, obtain information on the source of funds (where the funds came from for a specific transaction) and the source of wealth (the overall economic activity that generates the customer's total net worth). This is particularly crucial in the virtual asset space.

Ongoing Monitoring: Continuously monitor the business relationship and transactions to ensure they are consistent with the VASP's knowledge of the customer, their business, and risk profile. This includes monitoring for unusual or suspicious activities.

Politically Exposed Persons (PEPs): Implement procedures to determine if a customer or beneficial owner is a PEP. Apply enhanced due diligence (EDD) measures to PEPs, their family members, and close associates.

Sanctions Screening: Screen customers and transactions against national and international sanctions lists (e.g., UNSC sanctions).

Enhanced Due Diligence (EDD): Apply EDD for higher-risk scenarios, which often include:

Report Suspicious Activity: Immediately report any transaction, attempted transaction, or funds where there are reasonable grounds to suspect that they are linked to money laundering or terrorist financing.

Duration: Records must be maintained for a minimum of five (5) years from the date of the transaction or the end of the business relationship, whichever is later.

Reporting Body: All STRs must be submitted to the Qatar Financial Information Unit (QFIU).

Mainland Qatar (Qatar Central Bank - QCB): The QCB issued a prohibition on virtual asset activities for all financial institutions under its supervision in April 2020. This means there are no licensed Virtual Asset Service Providers (VASPs) on the mainland to which the Travel Rule would apply. Any unlicensed VA activity is illegal.

Qatar Financial Centre (QFC) (QFCRA): The QFCRA, which regulates the Qatar Financial Centre, takes an activity-based approach and allows for the licensing of firms engaged in virtual asset activities, subject to strict regulatory requirements. For these licensed entities, FATF Recommendations, including the principles of the Travel Rule, are applicable.

Effective Date: The prohibition came into effect with QCB Circular No. 12/2020 on Virtual Assets, issued on April 28, 2020.

Penalties for Non-Compliance:

USD/EUR 1,000 (or equivalent QAR): For transfers at or above this amount, the ordering VASP must obtain and transmit basic originator and beneficiary information (name, account number/VA wallet address).

USD/EUR 3,000 (or equivalent QAR): For transfers at or above this amount where the originator or beneficiary is not an existing customer, more comprehensive information, including full physical addresses and dates of birth, is generally required.

Legal Basis: Qatar implements UN Security Council Resolutions through its domestic legal framework, primarily Law No. 20 of 2019 on Combating Money Laundering and Terrorist Financing. This law mandates compliance with UN sanctions, including the freezing of funds and assets of designated individuals and entities.