Venezuela -- Travel Rule Implementation Regulatory Overview

Venezuela's implementation of the FATF Travel Rule, like its broader regulatory framework for cryptoassets, is complex and somewhat distinct due to its unique economic and political circumstances. While it has established regulations for cryptoassets and AML/CFT, the specific implementation of the Travel Rule's VASP-to-VASP information sharing mechanism might not perfectly align with international best practices or the explicit wording of FATF guidance.

The primary regulator for cryptoassets in Venezuela is the National Superintendency of Cryptoassets and Related Activities (SUNACRIP).

Here's a breakdown:

1. Adoption of Travel Rule Principles

• Adopted: While Venezuela does not explicitly use the term "Travel Rule" in its legislation, the principles underlying the FATF Travel Rule – primarily the identification of both the originator and beneficiary of a virtual asset transfer – are incorporated into its broader AML/CFT framework for cryptoassets.
• Spirit vs. Letter: The Venezuelan framework emphasizes robust Know Your Customer (KYC) and Customer Due Diligence (CDD) for all users of regulated crypto services, and mandates reporting of suspicious transactions. This addresses the spirit of identifying parties to transactions, but the specific mechanism of inter-VASP information exchange for all transactions above a threshold is less clearly articulated compared to other jurisdictions directly adopting the FATF guidance.
• FATF Status: Venezuela has been under increased monitoring by the FATF due to strategic deficiencies in its AML/CFT regime. While it has made commitments to address these deficiencies, its overall compliance and effectiveness are still under scrutiny. This means that while regulations exist on paper, their practical implementation and alignment with global standards can be inconsistent.

2. Relevant Legislation and Effective Dates

The primary legal framework for cryptoassets and AML/CFT in Venezuela includes:

• Constitutional Law of the Integral System of Cryptoassets (Ley Constitucional del Sistema Integral de Criptoactivos): This foundational law, enacted in 2018, establishes the legal basis for cryptoassets, mining, exchanges, and other related activities, and grants SUNACRIP its regulatory powers.
  • Link (Spanish): Gaceta Oficial Extraordinaria N° 6.370 - Ley Constitucional del Sistema Integral de Criptoactivos (Note: May need to search for the specific Gaceta Oficial number for the most direct link, as these are sometimes paywalled or moved).
• SUNACRIP Providencias (Administrative Orders): SUNACRIP issues specific administrative orders that detail the implementation of the Constitutional Law.
  • Providencia N° 094-2020 (dated October 16, 2020): This is a key regulation that establishes the "General Rules of Prevention and Control of Money Laundering, Financing of Terrorism and Proliferation of Weapons of Mass Destruction, Applicable to Virtual Asset Service Providers (VASPs) and Users of the National Cryptoasset System." This providencia is crucial for AML/CFT compliance in the crypto sector.
    • Effective Date: October 16, 2020.
    • Link (Spanish): Providencia N° 094-2020 - Gaceta Oficial N° 41.986 (See page 13 for the start of Providencia 094-2020).

3. Threshold Amounts

• No Explicit Travel Rule Threshold: Providencia N° 094-2020, while mandating robust identification and transaction monitoring, does not explicitly set a specific threshold (e.g., 1,000 USD/EUR) for inter-VASP information sharing in the same way the FATF Travel Rule recommends.
• Focus on Identification for All Transactions: Instead, the Venezuelan framework requires VASPs to:
  • Identify and verify the identity of all clients/users for any transaction, regardless of amount (Article 8 of Providencia 094-2020).
  • Maintain records of all transactions.
  • Implement risk-based approaches.
• Suspicious Transaction Reporting (STR) Threshold: The focus is on identifying and reporting suspicious transactions to the National Financial Intelligence Unit (UNIF), rather than a blanket information exchange for all transactions above a specific amount.

4. Which VASPs Are Covered

Providencia N° 094-2020 broadly covers all Virtual Asset Service Providers (VASPs) operating within Venezuela's National Cryptoasset System. This includes, but is not limited to:

• Exchanges: Crypto-fiat and crypto-crypto exchanges.
• Custodians: Entities providing custodial services for cryptoassets.
• Issuers: Entities involved in the issuance of cryptoassets.
• Transfer Services: Entities facilitating the transfer of cryptoassets.
• Other Service Providers: Any natural or legal person that, on behalf of a third party, carries out operations related to virtual assets (e.g., crypto ATM operators, wallet providers that facilitate transfers, etc.).
• All must be registered with SUNACRIP.

5. Technical Implementation Requirements

• No Specific Protocol Mandated: Venezuelan regulations (Providencia 094-2020) do not specify particular technical protocols for Travel Rule compliance (e.g., TRISA, Sygna, OpenVASP).
• Internal Systems and Reporting: VASPs are required to:
  • Implement robust internal AML/CFT policies and procedures.
  • Maintain detailed records of all transactions and customer information.
  • Establish secure systems for identifying clients, monitoring transactions, and detecting suspicious activities.
  • Report suspicious transactions and other required information to SUNACRIP and the UNIF in the prescribed formats.
• API/Interoperability: While the spirit of the Travel Rule is there (knowing sender/receiver), the technical requirement for VASPs to share originator/beneficiary information directly with each other for every transaction above a threshold is not explicitly detailed as a technical interoperability mandate. The emphasis is on internal record-keeping and reporting to central authorities.

6. Penalties for Non-Compliance

Non-compliance with the Constitutional Law of Cryptoassets and SUNACRIP's regulations, including AML/CFT provisions, can result in significant penalties:

• Fines: Substantial monetary fines, which can vary based on the severity of the infraction and the VASP's size. These are often denominated in Petro (PTR), Venezuela's state-backed cryptocurrency, which can fluctuate in value relative to other currencies.
• Suspension or Revocation of Licenses/Authorizations: SUNACRIP has the power to suspend or revoke the operating licenses of non-compliant VASPs.
• Confiscation of Assets: Assets related to illicit activities can be confiscated.
• Criminal Charges: Serious AML/CFT breaches can lead to criminal charges for individuals involved, including imprisonment, under Venezuela's broader anti-money laundering and anti-terrorism financing laws.
• Article 57 of the Constitutional Law of the Integral System of Cryptoassets details penalties for operating without authorization, fraudulent use, and other offenses, with fines ranging from 50 to 300 Petro and potential imprisonment. Providencia 094-2020 also refers to these penalties for AML/CFT violations.

Summary

Venezuela has a regulatory framework for cryptoassets under SUNACRIP, which includes AML/CFT obligations for VASPs. While it requires strong KYC/CDD and suspicious transaction reporting, addressing the spirit of identifying transaction parties, it doesn't explicitly mandate the inter-VASP information sharing mechanism of the FATF Travel Rule with a specific threshold. The focus is more on centralized reporting to authorities (SUNACRIP/UNIF) rather than decentralized VASP-to-VASP data transfer. Venezuela's overall AML/CFT regime remains under FATF increased monitoring, indicating ongoing challenges in effective implementation and compliance with international standards.