Georgian central bank to launch AML probe into crypto firms

Georgia, a major cryptocurrency-friendly country among post-Soviet states, is preparing to start monitoring crypto firms to prevent money laundering and comply with sanctions.

The National Bank of Georgia (NBG) plans to launch mandatory supervision of virtual asset service providers (VASPs) starting Sept. 1, 2023.

The NBG acting governor Archil Mestvirishvili said that the new regulatory measures will help the country combat money laundering, the local news agency InterPressNews reported on May 31.

In line with Anti-Money Laundering considerations, the upcoming VASP probe is expected to increase the country’s compliance with Western sanctions against Russia and Belarus.

Mestvirishvili noted that the NBG is among the main authorities that supervise compliance with those sanctions. The supervision was especially active last year when global jurisdictions such as the United States and the European Union imposed sanctions against Russia, he added, stating:

“We have created an additional department for monitoring sanctions. The enforcement of the sanctions is very important and the financial sector takes it very seriously.”

In addition to the VASP supervision, the NBG is also preparing to enforce a set of major restrictions for foreign bank account holders. Starting from Sept. 1, Russian citizens will not be allowed to withdraw more than 20% from their savings accounts immediately.

According to the central bank, such measures aim to support Georgia’s economic stability amid the increasing foreign currency deposits by Russians. “Since this capital inflow may be of a temporary nature, it’s better to keep it in liquid funds,” the regulator reportedly said.

The news comes amid the Georgian government preparing to approve cryptocurrency-related legislation in the autumn session. As previously reported, a local draft bill on crypto regulation aims to coordinate local laws with major European Union directives and provide legal status to entities involved in digital asset trading.

The upcoming crypto rules are also designed to prevent the use of crypto for money laundering and terrorist financing and help Georgia become a major global crypto hub.

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