Fiji Reaffirms Ban on Crypto Service Providers Over Financial Crime Risks

Fiji’s National Anti-Money Laundering Council (NAML) has reaffirmed its ban on virtual asset service providers (VASPs), arguing that the decentralized and anonymous nature of virtual assets makes them vulnerable to criminal misuse.

Virtual Assets Prohibition: Council Cites Security Risks

The Fiji National Anti-Money Laundering Council (NAML) has reaffirmed its decision to prohibit Virtual Asset Service Providers (VASPs) from operating within the country. The NAML adds the ban, which is based on a risk-based approach, aligns with international standards, including those of the Financial Action Task Force (FATF).

In a media release, the council says it identified significant risks associated with cryptocurrencies and virtual assets, particularly concerning money laundering, terrorist financing, and proliferation financing. While it acknowledges the innovation behind virtual assets, it argues their decentralized and anonymous nature makes them highly susceptible to misuse by criminal networks.

NAML’s reaffirmation of the ban came more than a year after the country’s central bank threatened to impose penalties on residents purchasing virtual assets. As reported by Bitcoin.com News in April 2024, the central bank outlawed the use of local debit and credit cards to buy virtual assets.

Meanwhile, the NAML claimed virtual assets’ rapid and anonymous nature of cryptocurrency transactions, which it said makes them an attractive tool for laundering illicit funds and evading detection. It also argues that the lack of centralized oversight in virtual assets is exploited by extremist groups to fund their operations. The NAML also asserts that virtual assets may be used to finance the acquisition of weapons of mass destruction, posing a threat to global and regional security.

According to the council, Fiji’s current supervisory and enforcement capabilities are not sufficient to provide safe and effective oversight of the virtual asset sector, despite some jurisdictions opting for regulation. The council acknowledges the advantages of regulation but emphasizes that without robust infrastructure and enforcement mechanisms, it could expose Fiji to significant vulnerabilities.

The chairperson of the council and Permanent Secretary for Justice Selina Kuruleca, stated that the council’s priority is “the protection of Fiji’s financial system, and the safety of its people”. She added that the ban promotes a secure and transparent environment that supports legitimate investment and economic growth.

The council’s position is not permanent and will be subject to review as “global standards evolve and Fiji strengthens its regulatory and technological frameworks”. Until then, the prohibition of VASPs is considered a “necessary and prudent safeguard”.

The National Anti-Money Laundering Council is a body established by law to coordinate Fiji’s efforts in combating money laundering and other financial crimes. It provides advice and recommendations and is chaired by the Permanent Secretary for Justice. Its members include the Governor of the Reserve Bank of Fiji, the Director of Public Prosecutions, the Commissioner of Police, the Chief Executive Officer of the Fiji Revenue and Customs Services, and the Director of the Financial Intelligence Unit.