Centralized exchange in Solomon Islands

There are no regulated cryptocurrency exchanges operating under Solomon Islands' jurisdiction. Trading would typically occur on offshore platforms, which are outside the direct regulatory purview of the Solomon Islands authorities.

The CBSI has warned the public against the risks of trading cryptocurrencies due to their volatility, speculative nature, and lack of regulation.

Lack of Specific Legislation: Without a dedicated framework, enforcement actions are harder to initiate.

Focus on Warnings: The CBSI's primary approach has been preventive, issuing general public warnings about the risks of cryptocurrencies, scams, and their non-recognition as legal tender.

Companies Act 2009: For breaches related to illegal offerings of unregistered securities or failures in disclosure.

No specific crypto custody license: There is no dedicated license for virtual asset custodians.

Potential application of existing licenses: If an entity's activities involving digital assets were deemed to fall under the definition of banking business, financial institution services, or securities trading, it would likely require a license under the Financial Institutions Act 1998 or other relevant financial legislation administered by the CBSI. However, this would depend on how digital assets are legally characterized, which is currently ambiguous for custody.

No specific crypto rules: There are no explicit rules mandating the segregation of client digital assets from the custodian's proprietary assets.

General fiduciary principles: For traditional financial institutions, general principles of fiduciary duty and client asset protection would typically apply, implying segregation. However, without specific legislation for digital assets, the enforceability and interpretation for crypto assets would be unclear.

Anti-Money Laundering and Counter-Terrorist Financing Act 2021 (the AML/CFT Act): This comprehensive legislation aligns the Solomon Islands with international FATF standards, covering customer due diligence, reporting obligations, and broader AML/CFT requirements for financial institutions, which increasingly include VASPs.

Identification and Verification of Identity:

Beneficial Ownership: Identify and verify the identity of the natural person(s) who ultimately own or control the customer (typically 25% or more ownership/control threshold for legal entities).

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.

Enhanced Due Diligence (EDD): Apply EDD measures in higher-risk situations, including:

Reporting Obligation: Reports must be submitted to the SIFIU promptly. SIFIU guidance usually specifies a timeframe (e.g., within 24-48 hours of forming suspicion).

No Tipping-Off: VASPs and their employees are strictly prohibited from informing the customer or any third party that an STR has been or will be submitted.

Types of Records:

Not Adopted: The Solomon Islands does not have a specific regulatory framework for Virtual Assets (VAs) or Virtual Asset Service Providers (VASPs). Consequently, the FATF Travel Rule (Recommendation 16, as applied to VASPs under Recommendation 15) has not been adopted or made effective.

Since there is no regulatory framework for VASPs or the Travel Rule, there are no established threshold amounts for information exchange in the Solomon Islands.

As there is no specific legislation or regulation covering VASPs, no VASPs are formally covered under a VASP-specific AML/CFT regime, nor are they subject to the Travel Rule.

However, operating any unregulated financial service carries inherent risks, and any entity found to be facilitating money laundering or terrorist financing through virtual assets, if such activities were ever investigated and proven, would likely fall under the general provisions of the Solomon Islands Anti-Money Laundering and Counter-Terrorist Financing Act 2002 (as amended). But this would be for the underlying crime, not for VASP-specific regulatory non-compliance.