The VASP as an Accountable Person: Why Documentation Is Mandatory
The Georgian Law on the Facilitation of the Suppression of Money Laundering and Terrorism Financing lists the virtual asset service provider among financial institutions — in other words, as an accountable person. For a crypto business this means internal policy documentation is not a matter of discretion: the law directly requires it, and when the supervisory authority inspects the entity, these documents are requested first. The circle of accountable persons under the law is wide — from banks and deposit-taking institutions, insurance brokers and currency exchange points, microfinance organizations, to virtual asset service providers — and the same preventive standard applies to each of them.
Documentation should be driven through the prism of inspection readiness: a policy is only as good as its execution is evidenced by records, manuals and proof of staff training. That is why the policy text must rest on the specific blocks of the law — who is an accountable person, which preventive measures are carried out, how the beneficial owner is determined, and how the accompanying information for transfers of convertible virtual assets is recorded.
Preventive Measures: The Core Blocks of the Policy
Article 10 of the law sets four pillars of preventive measures: identification of the client and verification based on a reliable and independent source; identification of the beneficial owner and taking reasonable measures to verify them on the basis of a reliable source; establishing the purpose and intended nature of the business relationship; and ongoing monitoring of the business relationship. The entire client-service cycle is built on these four pillars — from onboarding to regular transaction review.
The details of the same article fill the operational part of the policy. When identifying a person acting on behalf of the client, the entity must verify that person against a reliable and independent source and obtain a duly certified document confirming the authority of representation. For a legal person, an unregistered organizational structure or a trust, the ownership and control structure must be studied. The essence of the client's activity must be established, and information obtained on the nature, volume and frequency of expected transactions. Monitoring means examining transactions prepared, concluded or executed within the relationship to determine how far they correspond to the information known about the client, the client's commercial or professional activity and the client's risk level, and where necessary — the origin of the client's property, funds and convertible virtual asset. Identification data must be updated with appropriate periodicity.
The law also actively restricts the relationship. It is prohibited to establish or continue a business relationship, or to conclude or perform a one-off transaction, where the accountable person cannot implement the preventive measures — and in that case the person must examine whether grounds for submitting a report exist. Likewise, the relationship is prohibited where a well-founded suspicion exists that the client or another participant in the transaction belongs to the sanctions-related circles defined by law. The policy document must describe exactly these prohibitions and the criteria for applying them.
The Beneficial Owner: The 25 Percent Threshold and Its Exceptions
Article 13 defines the beneficial owner: a natural person who is the ultimate owner or ultimate controller of the client, or on whose behalf a transaction is being prepared, concluded or executed. For a legal person, the beneficial owner is a natural person who directly or indirectly holds 25 percent or more of the shares or voting rights, or otherwise exercises ultimate control over the entity. Direct ownership means the natural person's holding of 25 percent or more; indirect ownership means holding through a legal person or persons controlled by the same natural person.
If, after exhausting all possible measures, the beneficial owner does not exist, the measures are applied towards the person holding the senior managerial position of the client. Where a trust or a trust-like structure exists, identification covers the trustee, the settlor, the guardian (where one exists), the beneficiary, and any other natural person exercising effective ultimate control. Where the beneficiary is not predetermined, sufficient information must be obtained about the class of persons for whose benefit the trust operates. For a virtual asset service provider this means the procedure for determining the beneficial owner must be fixed in documents with formats and deadlines.
Transfers of Convertible Virtual Assets: Accompanying Information
Article 17, first superscript, governs transfers of convertible virtual assets. A transfer is an operation performed by the initiator or on their instruction or with their consent, by digital means, to make a convertible virtual asset available to a recipient; the initiator and the recipient may be the same person. The service provider must ensure that the transfer or receipt of a convertible virtual asset is accompanied by the accompanying information determined in the manner set by the supervisory authority. And where the transfer does not fully contain the identification data of the initiator or the recipient according to the rules determined by the supervisory authority, the receiving provider must examine whether grounds for submitting a report exist. The technical implementation of this rule — which fields travel with the transfer and what happens with incomplete data — should be set out in the policy as a separate procedure.
Frequently Asked Questions
Who is an accountable person in the crypto sector?
The virtual asset service provider — the law places it on the list of financial institutions, so the full package of preventive measures applies to it.
What does client due diligence include?
Identification against a reliable source, determination of the beneficial owner, establishing the purpose and nature of the relationship, and monitoring — by volume, nature, frequency and origin of funds.
How do I identify the beneficial owner?
Look for the natural person holding, directly or indirectly, 25 percent or more of the shares or exercising ultimate control; failing that, the person in a senior managerial position.
What accompanies a transfer of a convertible virtual asset?
The accompanying information defined under the supervisory authority's rules; incomplete identification data triggers an examination of reporting grounds.
How We Help on Legal.ge
Lawyers on Legal.ge prepare the full anti-money-laundering documentation package for virtual asset service providers: client due diligence procedures, a beneficial-owner rule built on the 25 percent threshold, monitoring criteria and formats for transfer accompanying information. We audit your existing documentation and close the gaps before an inspection. Contact us to build a documentary foundation that fits your business model.