Eswatini -- Travel Rule Implementation Regulatory Overview

Eswatini (formerly Swaziland) faces significant challenges in implementing the FATF Travel Rule for Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs). As of the latest FATF assessments, Eswatini has not yet fully adopted or effectively implemented the Travel Rule within its legal and regulatory framework.

Here's a breakdown of the status based on available FATF Mutual Evaluation and Follow-up Reports:

Status of FATF Travel Rule Implementation in Eswatini

1. Whether Adopted:

• No, not yet comprehensively adopted for Virtual Asset Service Providers (VASPs).
• Eswatini's legislative and regulatory framework for virtual assets (VAs) and virtual asset service providers (VASPs) is still developing and considered significantly deficient by the FATF. The country has not yet effectively implemented the FATF Recommendations 15 (on new technologies) and 16 (the Travel Rule, adapted for VAs) at an operational level.
• The FATF's Mutual Evaluation Report (MER) of Eswatini (November 2020) highlighted that Eswatini had not yet assessed or addressed the Money Laundering (ML) and Terrorist Financing (TF) risks associated with VAs and VASPs. Consequently, the country lacked any regulatory or supervisory framework for VASPs.
• Subsequent Enhanced Follow-up Reports (e.g., the 2nd Enhanced Follow-Up Report, 2023) show some progress in general AML/CFT measures, but persistently highlight the need for Eswatini to:
  • Conduct a VA/VASP risk assessment.
  • Implement a comprehensive legal and regulatory framework for VASPs, including registration/licensing and supervision.
  • Apply AML/CFT obligations, including the Travel Rule, to VASPs.

2. Effective Date:

• Not Applicable. Since a comprehensive framework for VASPs, specifically incorporating the Travel Rule, has not been fully adopted, there is no specific effective date for its implementation in Eswatini.

3. Threshold Amounts:

• Not Applicable. As the Travel Rule is not yet effectively implemented for VASPs, there are no specific threshold amounts established for virtual asset transfers in Eswatini. The FATF standard generally recommends a threshold of USD/EUR 1,000 for transfers where originator and beneficiary information must be exchanged.

4. Which VASPs are Covered:

• Currently, VASPs are not effectively covered under a specific, dedicated regulatory regime in Eswatini. The absence of a clear legal framework means that obligations, including the Travel Rule, cannot be systematically applied to them.
• The FATF reports indicate that VASPs are not yet defined, licensed, registered, or supervised for AML/CFT purposes in Eswatini.

5. Technical Implementation Requirements:

• Not Applicable. Without the legal and regulatory framework in place, there are no stipulated technical implementation requirements for the Travel Rule.

6. Penalties for Non-Compliance:

• Currently, there are no specific penalties for non-compliance with the Travel Rule by VASPs because the framework for their regulation and the Travel Rule's application is not yet established.
• Eswatini has general anti-money laundering and combating the financing of terrorism (AML/CFT) legislation, primarily the Prevention of Organised Crime Act, 2017 (POCA). This Act includes penalties for various AML/CFT offenses and non-compliance by designated reporting entities.
• However, until VASPs are explicitly brought under the scope of this legislation (or specific VASP regulations are enacted) as reporting entities with specific Travel Rule obligations, these general penalties would not directly apply to Travel Rule non-compliance by VASPs. Once such a framework is in place, VASPs would likely be subject to administrative penalties (fines, license revocation) and potentially criminal penalties for severe breaches of AML/CFT laws.

References:

• FATF Mutual Evaluation Report of Eswatini (November 2020): This report details the original findings regarding Eswatini's AML/CFT system, including significant deficiencies related to virtual assets and VASPs.
  • You can find this report on the FATF website: https://www.fatf-gafi.org/en/countries/Eswatini.html (Look for "Mutual Evaluation Report of Eswatini")
• FATF Follow-Up Reports for Eswatini: Subsequent follow-up reports provide updates on Eswatini's progress in addressing the deficiencies identified in the MER. The most recent reports will indicate the ongoing status of R.15 and R.16 implementation.
  • These are also available on the same FATF country page for Eswatini. For instance, look for "2nd Enhanced Follow-up Report & Technical Compliance Re-Rating of Eswatini (October 2023)."
• Eswatini Financial Intelligence Unit (EFIU): The EFIU is the primary body responsible for AML/CFT in Eswatini. Their website would be the place to look for any future guidance or legislation once it is enacted.
  • EFIU Website: http://www.efiufi.org.sz/ (As of current knowledge, specific VASP/Travel Rule guidance is not present due to the current regulatory gap).
• Prevention of Organised Crime Act, 2017 (POCA): The core AML/CFT legislation in Eswatini. While not specific to VASPs or the Travel Rule currently, any future regulations for VAs/VASPs would likely be enacted under or in conjunction with this act.
  • Finding a public URL for the full text of Eswatini legislation can sometimes be challenging, but it would typically be available through official government gazettes or legal databases within Eswatini.

In summary, while Eswatini is under international pressure from the FATF to address its AML/CFT deficiencies, particularly concerning virtual assets and VASPs, the comprehensive implementation of the Travel Rule remains a work in progress with significant legislative and regulatory gaps yet to be filled.