Grenada -- Travel Rule Implementation Regulatory Overview

Grenada has officially adopted and implemented the FATF Travel Rule through dedicated legislation.

Here's a breakdown of its status:

Grenada FATF Travel Rule Implementation Status

1. Whether Adopted: Yes, Grenada has explicitly adopted the FATF Travel Rule (Recommendation 16) by incorporating it into its domestic legal framework.

2. Effective Date: The primary legislation governing virtual assets and mandating compliance with the Travel Rule is the Virtual Asset Business Act, 2023 (Act No. 36 of 2023). This Act was assented to on December 29, 2023, and came into operation on January 1, 2024.

3. Threshold Amounts: Grenada's Virtual Asset Business Act, 2023, directly references FATF Recommendation 16. Section 16(1) of the Act states: "A virtual asset service provider shall, in respect of a virtual asset transfer, obtain and hold the originator information and beneficiary information in accordance with FATF Recommendation 16 for Wire Transfers, and the Guidance for Virtual Assets and Virtual Asset Service Providers, as revised from time to time."

By explicitly referencing FATF Recommendation 16 and its associated guidance, Grenada adopts the FATF's established thresholds:

• All transfers above USD/EUR 1,000 (or equivalent): Both originator and beneficiary information must be collected, held, and transmitted.
• All transfers below USD/EUR 1,000 (or equivalent): Originator name and account number (or unique transaction reference) and beneficiary name and account number (or unique transaction reference) must be collected and held. This information should be readily available and immediately provided to authorities upon request. Full Travel Rule data is required if there are suspicions of money laundering or terrorist financing, irrespective of the threshold.

4. Which VASPs are Covered: The Virtual Asset Business Act, 2023, Section 2 (Definitions) defines a "virtual asset service provider" (VASP) broadly to cover the following activities conducted as a business for or on behalf of another person:

• Exchange between virtual assets and fiat currencies.
• Exchange between one or more forms of virtual assets.
• Transfer of virtual assets.
• Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets.
• Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.

This definition aligns closely with the FATF's definition of VASP, ensuring comprehensive coverage of entities operating in the virtual asset space.

5. Technical Implementation Requirements: The Act outlines the core requirements for VASPs regarding the Travel Rule:

• Information Collection: VASPs must "obtain and hold the originator information and beneficiary information" as per FATF R.16. This includes names, physical addresses, unique transaction identifiers, and virtual asset wallet addresses for both originator and beneficiary.
• Information Retention: Section 16(2) mandates that VASPs must "store the information obtained and held under subsection (1) for a period of not less than seven years from the date of the virtual asset transfer."
• Information Accessibility: Section 16(3) requires VASPs to "make the information obtained and held... available to the Authority upon request." The Authority refers to the Grenada Authority for the Regulation of Financial Institutions (GARFIN).
• Declining Transfers: Section 16(4) states that "Where a virtual asset service provider is unable to comply with subsection (1), the virtual asset service provider shall decline the virtual asset transfer and make a report to the Financial Intelligence Unit."
• Risk-Based Approach: While the Act doesn't specify particular software or protocols, compliance implies the need for robust systems capable of securely collecting, storing, and transmitting this data, potentially utilizing Travel Rule solutions (e.g., TRP, OpenVASP, Sygna, Travel Rule Universal Protocol - TRUP) for inter-VASP communication. VASPs are expected to implement a risk-based approach to assess and mitigate ML/TF risks.

6. Penalties for Non-Compliance: The Virtual Asset Business Act, 2023, imposes significant penalties for non-compliance:

• General Offences (Section 34): "A person who contravenes a provision of this Act or the Regulations commits an offence and where no specific penalty is provided, is liable on summary conviction to a fine not exceeding EC$250,000 (approximately USD $92,500) or imprisonment for a term not exceeding 3 years, or both."
• Offences by Body Corporate (Section 35): Where an offence is committed by a body corporate, and it's proven that a director, manager, secretary, or other similar officer consented or connived in the commission of the offence, they are also deemed to have committed the offence and liable to the same penalties.
• Non-compliance with AML/CFT obligations, including the Travel Rule, can also trigger penalties under Grenada's broader anti-money laundering legislation, such as the Proceeds of Crime Act.

References:

• Virtual Asset Business Act, 2023 (Act No. 36 of 2023):
  • Grenada Government Gazette: http://grenadagazette.gov.gd/wp-content/uploads/2024/02/No.-36-Virtual-Asset-Business-Act-2023.pdf
  • Note: This is an official government publication of the Act.

Grenada's comprehensive Virtual Asset Business Act, 2023, demonstrates a clear commitment to aligning with international FATF standards for virtual assets and VASPs, including the Travel Rule.