Georgia central bank launches AML investigation into crypto companies

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

The National Bank of Georgia plans to begin mandatory oversight of virtual asset service providers (VASP) beginning September 1, 2023.

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

In line with anti-money laundering considerations, the upcoming VASP investigation is expected to increase the country’s compliance with Western sanctions against Russia and Belarus.

Mestvirishvili noted that NBG is one of the main authorities monitoring compliance with those sanctions. The oversight 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 set up an extra department for the supervision of sanctions. The enforcement of the sanctions is very important and the financial sector takes it very seriously.”

In addition to VASP supervision, the NBG is also preparing to enforce a series of major restrictions for foreign bank account holders. As of September 1, Russian citizens are not allowed to withdraw more than 20% directly from their savings account.

According to the central bank, such measures are designed to support Georgia’s economic stability amid rising foreign currency deposits by Russians. “Since this capital inflow may be temporary, it is better to keep it in cash,” the regulator said.

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The news comes as the Georgian government prepares to pass cryptocurrency-related legislation during its fall session. As previously reported, a local crypto regulation bill aims to coordinate local laws with key European Union directives and grant legal status to entities involved in digital asset trading.

The upcoming crypto regulations also aim to prevent the use of crypto for money laundering and terrorist financing purposes and to help Georgia become a major global crypto hub.

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