April 14, 2024

Colombia’s Financial Superintendence Presents Projects For Crypto Providers

A project was recently presented by the Financial Superintendence of Colombia that is aimed at providing clarity about the future handling of links between virtual asset service providers (VASPs) and banks. Some key concepts have been defined in the document and a set of prerequisites have also been outlined that will have to be verified by banks before they allow VASPs to open accounts with them.

VASP regulation in Colombia

Countries in Latin America are focusing on crypto regulation, as the adoption of these digital currencies in the region has become widespread. Colombia is also one of the countries that have seen crypto adoption grow very quickly, so it is also focusing on the market’s regulation.

Therefore, a document has been put forward by Colombia’s Financial Superintendence that outlines the norms about requirements, that all crypto custody service providers and exchanges would have to meet in order to avail of the services of banks in the country. Some of the important concepts have been defined in the said document, which includes definitions of VASPs, along with the assets under regulation.

Addressing risks

The document also established that all virtual asset providers (VASPs) that want to operate in the country would also have to be connected to the financial intelligence office called UIAF. Plus, they would need to have a plan of action in place for addressing terrorism financing and money laundering attempts that could be made via their respective platforms.

Moreover, the project also referred to the Travel Rule imposed by the Financial Action Task Force (FATF) indirectly. It asserted that the banks in Colombia would also need to monitor transactions involving virtual assets and would also need to have some information about every transaction, such as details about the originator as well as the beneficiary. Banks need to have the operational and technical capacity to do so.

More requirements

It was further established in the proposal that all VASPs would have to inform their customers about the services they provide in detail and also highlight the risks associated with them. They would also have to mention the virtual assets they are offering and all costs that are involved.

Furthermore, they would also have to have a plan in place for handling cybersecurity and operational risks. These include any platform issues or possible hacks that could affect the delivery of their services to clients. In addition, banks would have the responsibility of keeping their responsibilities separate from that of VASPs, which means informing customers that platform-related problems would only be dealt with by the providers and not the banks.

Restrictions applicable to investments were also outlined in the proposal. They said that non face-to-face channels would have to be used for collecting deposits, whether in the form of funds or in the form of products, in the name of the virtual asset service provider (VASP).

It should be noted that the proposal has not been finalized as yet and suggestions can be submitted to the Financial Superintendence in Colombia by August 12th.

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