Crypto-funded debit card in Saint Vincent and the Grenadines

Virtual Asset Business Act, 2023 (VABA 2023): This is the overarching legislation governing virtual asset businesses (VABs) in SVG. It aims to prevent money laundering and terrorist financing, protect consumers, and ensure the orderly development of the virtual asset sector.

Mandatory Licensing: Any entity wishing to operate as a Virtual Asset Business (VAB) in Saint Vincent and the Grenadines must obtain a license from the FSA.

Activities Requiring Licensing: The VABA 2023 lists several activities that constitute a VAB, including:

Exchange between virtual assets and fiat currencies.

Issuance of a virtual asset (which includes stablecoins) or participation in virtual asset services.

Provision of financial services related to an issuer's offer and/or sale of a virtual asset.

E-money/Payment Tokens: The VABA 2023 does not create a separate classification specifically for "e-money" or "payment tokens" for privately issued stablecoins beyond their classification as virtual assets. If a stablecoin functions as a medium of exchange or store of value, it is regulated as a virtual asset and its issuer as a Virtual Asset Business (VAB). SVG does not have a distinct E-money Act that would cover private stablecoins separately from virtual asset regulation.

Adequate Financial Resources: VABs must maintain "adequate financial resources" to carry on their business.

Safeguarding Client Assets: VABs are required to segregate client virtual assets from their own assets and hold them in a manner that protects clients' interests. This implicitly requires proper management and safeguarding of the reserves for asset-backed stablecoins.

Audited Financial Statements: VABs must submit audited annual financial statements. For asset-backed stablecoin issuers, this would involve demonstrating the existence and sufficiency of their reserves.

Application Process: Involves due diligence on beneficial owners, directors, management, business plan, AML/CFT compliance framework, and operational safeguards.

Fair Treatment of Clients: VABs are required to act honestly and fairly in the best interests of their clients.

Financial Services Authority (FSA): The supervisory authority responsible for licensing, regulating, and overseeing virtual asset businesses under the VABA 2023.

Identify and Verify Customer Identity:

For natural persons: Obtain full name, residential address, date of birth, nationality, and a unique identification number (e.g., passport, national ID card). Verification typically requires independent, reliable source documents.

For legal persons/entities: Obtain legal name, address of registered office and principal place of business, incorporation details (e.g., certificate of incorporation, articles of association), and identify beneficial owners (those who ultimately own or control 25% or more of the entity).

Risk-Based Approach: Apply a risk-based approach to CDD.

Enhanced Due Diligence (EDD): Required for high-risk customers, such as Politically Exposed Persons (PEPs), customers from high-risk jurisdictions, or transactions involving complex structures or unusually large amounts. This involves more rigorous verification, deeper understanding of source of funds/wealth, and higher-level approval for establishing relationships.

Conduct Ongoing Monitoring: Regularly review the business relationship and transactions undertaken to ensure they are consistent with the entity's knowledge of the customer, their business, and risk profile, including (where necessary) the source of funds.

Obligation to Report: All reporting entities (which would include VASPs if their activities are considered relevant financial business) have a legal obligation to report any transaction (or attempted transaction) where there are reasonable grounds to suspect that funds are the proceeds of criminal activity or are linked to terrorist financing.

Recipient: Reports must be submitted to the Financial Intelligence Unit (FIU) of Saint Vincent and the Grenadines.

Timeliness: STRs must be filed promptly, "without delay," upon forming the suspicion.

No Tipping-Off: It is an offense to disclose to the customer or any third party that a suspicious transaction report has been or will be made.

Retention Period: Records must generally be kept for a minimum of five (5) years after the business relationship has ended or after the date of the transaction.

Financial Services Authority (FSA):

Financial Intelligence Unit (FIU):

Corporate Income Tax Rate: The standard corporate income tax rate in SVG is generally around 30%.

However, fees charged by Virtual Asset Service Providers (VASPs) for their services (e.g., exchange fees, custodial fees, transaction fees) would generally be considered a supply of services and thus subject to VAT at the standard rate (currently 16%).

VAT/GST: SVG has a Value Added Tax (VAT). Cryptocurrency transactions themselves are generally not considered a supply of goods or services for VAT purposes, or may be treated as exempt financial services, though fees charged by Virtual Asset Service Providers (VASPs) would typically be subject to VAT.

Entity Targeted: General public and entities falsely claiming to be regulated by the SVG FSA for virtual asset business. Violation Type: Operating or advertising virtual asset business activities without proper licensing under the Virtual Asset Business Act, 2020 (VABA), or misrepresenting regulatory status. Penalty Amount: Not applicable to general warnings; specific penalties for unlicensed operation would be determined if an investigation led to a formal enforcement action, which typically isn't publicly detailed. Outcome: Increased public awareness, pressure on unlicensed entities to cease operations or comply, and a clear stance from the regulator.

Entity Targeted: All virtual asset service providers (VASPs) and the general public, including those considering operating in or from SVG. Violation Type: N/A (this is a regulatory clarification, not an enforcement action itself). However, entities failing to register or comply with VABA would be in violation. Penalty Amount: N/A. Outcome: Enhanced clarity on legal obligations for VASPs, driving compliance with registration requirements, AML/CFT measures, and consumer protection. This sets the stage for future enforcement by defining what constitutes a violation.