The Financial Investigation Unit (UIF) of the Attorney General’s Office (FGR) has approved the Guide for Virtual Asset Service Providers on Compliance with Anti-Money Laundering and Counter-Terrorist Financing Obligations.

Agreement No. 734, published in the Official Gazette on December 2, 2022, came into effect on the same day of its publication. The document aims to provide instructions that assist Virtual Asset Service Providers (VASPs) in complying with regulations and monitoring against money laundering and asset prevention.

Our associate, Adalicia Torres, explains that VASPs are natural or legal persons that act as payment processors or gateways, digital wallets, cryptocurrency custodians, digital exchange houses, ATMs, or any other entities that may vary depending on the nature of the services provided.

“With the adoption of Bitcoin as legal tender in El Salvador, the number of obligated subjects required to register with the UIF has been increasing. Now, the entity has established that Virtual Asset Providers must register as obligated subjects,” she emphasizes.

Our specialist indicates that the UIF Guide compiles the obligations that VASPs must fulfill to protect themselves from being used by criminals in money laundering schemes and to comply with international standards.

Some of the obligations described in the Guide include:
1. Having an anti-money laundering program in compliance with local legislation and international practices.

2. Procedures to prevent the loss, theft, or deterioration of customer assets.

3. Keeping records of assets, liabilities, and the provider’s equity, as well as records of customer accounts and transactions.

4. Keeping records of customer complaints.

5. Publishing on their website and in the application’s terms the contact information for the Superintendency of the Financial System to handle unresolved provider complaints.

6. Cybersecurity program.

7. Physical security program and disaster recovery plan.

8. Resolution plan that provides for an orderly liquidation in case of insolvency.

9. Transaction limits according to comprehensive risk management.

Torres also adds that there will be a registration procedure for Providers in El Salvador and non-resident Providers with the UIF, and updating of information. In case there are changes in the required information, they must update their registration on the platform within 15 business days.

In addition, VASPs must appoint and register a Principal Compliance Officer and an alternate. For the Provider domiciled in El Salvador, the officer must have two years of experience and hold a certification, enjoy independence and autonomy, hold a managerial position, have knowledge of legal, business, and control matters, and have an advanced academic degree.

For non-domiciled Providers, they must verify that the Compliance Officer meets the requirements of their home country for homologation. If the country lacks requirements, they must prove their knowledge in the field, maintain an employment relationship with the VASP, have knowledge of legal, business, and control matters, have basic knowledge of the business’s administration and legal aspects.

Our specialist explains that VASPs must report active, inactive, and disassociated customers they have interacted with during the month on a monthly basis. For this purpose, the customer will be reported as many times as products they have with the Provider. However, the disassociated customer will only be reported in the corresponding month.

Similarly, Providers must report individual transactions of their customers, equal to or greater than $1,000.00 according to the conversion rate to U.S. dollars on the day the transaction is executed and within a maximum period of 5 days following the transaction. VASPs will report transactions through eight forms:
1. Wallet to Wallet
2. Different Wallets
3. Wallet to Account
4. Electronic ATM to Wallet
5. Wallet to Electronic ATM
6. Card-Wallet
7. Buying and Selling and Conversion with Wallet
8. Currency Exchange with Wallet

If you have any questions, you can contact us through our social media channels or by visiting our offices located at Cuscatlán Street, #4312, Colonia Escalón, San Salvador, El Salvador.