The Vanuatu Financial Services Commission (VFSC) has taken a major step today to strengthen control over the digital finance sector.

The VFSC has released a full Risk Assessment Report on Virtual Asset Service Providers (VASPs), including digital money exchanges, crypto platforms, and Initial Token Offerings.

VFSC Commissioner Branan Karae said the report shows an increasing level of risks related to money laundering, terrorism financing, and other illicit financial activities.

This is the first time the Commission has mapped out the risks of virtual assets, identified red-flag indicators, and highlighted weaknesses in the current system.

“As the digital finance landscape continues to evolve, the VFSC recognizes the importance of understanding and mitigating risks associated with money laundering, terrorist financing, and other financial crimes. The risk report provides an in-depth analysis of existing regulatory controls and offers actionable recommendations to enhance the resilience of Vanuatu’s sector,” Karae said.

The report also states that oversight and compliance must be strengthened, and operators must work closely with the government to ensure they meet Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) laws.

The VFSC says the document demonstrates Vanuatu’s commitment to meeting global Financial Action Task Force (FATF) standards and ensuring that Vanuatu remains a trusted financial hub in the Pacific.

The Commission has also called on any individual or company applying for a VASP licence to study the report carefully and implement strong measures to reduce risks.

“This initiative reflects Vanuatu’s dedication to upholding the standards set by the Financial Action Task Force within its financial ecosystem,” the statement said.

The Commission says it will continue working with the finance sector to safeguard the integrity of Vanuatu’s financial system as digital finance continues to evolve.