What Governs International Crypto Transactions
The transfer of convertible virtual assets across borders is the object of special regulation under the Law on the Prevention of Money Laundering and the Financing of Terrorism. On this page we explain Articles 17-1, 18 and 19 of the Law — the concept of a transfer of a convertible virtual asset, the accompanying information requirements, the enhanced preventive measures and the high risk jurisdiction regime. This material is useful for anyone carrying out crypto operations abroad or servicing such operations — providers, investors and businesses that use crypto assets as a means of payment.
For the tax rules underneath these flows — classification and rates of crypto income — see our page on cryptocurrency taxation in Georgia.
Transfer of a Convertible Virtual Asset and Accompanying Information
Under Article 17-1 of the Law, a transfer of a convertible virtual asset is an operation performed by the initiator or on his instruction or with his consent, by digital means, to make the convertible virtual asset available to the recipient. In a transfer the initiator and the recipient may be the same person, or both may be served by the same virtual asset service provider. This definition matters because special transfer rules attach precisely to it — rules built on the model of classic bank transfers but applied to digital assets in an adapted form.
A virtual asset service provider must ensure that such a transfer or receipt is accompanied by accompanying information defined under the procedure established by the supervisory organ. If the transfer does not fully contain the identification data of the initiator or the recipient, the recipient's provider must examine whether a ground for reporting provided for by the Law exists. In practice this means that in international crypto transfers both the sending and the receiving side are responsible for the completeness of the information, and a gap leads to reporting and further measures.
Enhanced Preventive Measures
Article 18 of the Law obliges an accountable person, towards a client attributed to a high risk level, to apply additional measures beyond the basic preventive ones: obtain additional information on the property and activity of the client and/or the beneficial owner; increase the frequency of updating identification data; obtain additional information on the intended nature of the business relationship, including the purposes and grounds of expected transactions; obtain the permission of management to establish or continue the relationship; take reasonable measures to establish the origin of the client's property, monetary funds and convertible virtual asset; and conduct enhanced monitoring, including increasing the number or frequency of risk management measures.
Where necessary, the accountable person must apply other effective measures to manage the identified risks. In the crypto sector this approach works with particular strictness: a provider cannot confine itself to a formal check but must calculate the real profile of the client's activity and the logic of the client's transactions.
High Risk Jurisdictions
Article 19 of the Law defines a high risk jurisdiction as a country or territory where the system for preventing money laundering or the financing of terrorism has serious deficiencies. The National Bank, on the submission of the service, approves the list of such jurisdictions and amends it as necessary. Towards persons located in such jurisdictions, an accountable person must apply preventive measures enhanced in proportion to the risk, the business relationship and the transaction — including where the client is a legal entity registered there or managed from there, where the client is a natural person residing there, or where the transaction is conducted through a financial institution located there.
The Law also provides certain relief: enhanced measures are not mandatory towards a citizen of Georgia or a foreigner holding a residence permit here, nor where the institution located in the high risk jurisdiction is a subsidiary or branch of an institution registered in Georgia and group level compliance control ensures the management of risks. At the same time, in line with international standards, the competent organ must be able to apply measures proportional to the risk both when the international group making public statements (the group known by the abbreviation FATF) does so, and independently of such statements.
Frequently Asked Questions
What counts as a transfer of a convertible virtual asset?
An operation performed by digital means to make the asset available to the recipient; the initiator and the recipient may even be the same person.
What information must accompany a transfer?
Accompanying information defined under the procedure of the supervisory organ; where it is missing, the recipient's provider examines the ground for reporting.
What is required of a provider towards a high risk client?
Obtaining additional information, the permission of management, establishing the origin of funds and enhanced monitoring.
How do I know a jurisdiction is high risk?
From the list approved by the National Bank on the submission of the service, which is amended as necessary; checking the current list is required before each transaction.
How We Help on Legal.ge
The Legal.ge team helps participants in the crypto sector stay consistent with the regulations: we explain the transfer rules and accompanying information, structure internal compliance procedures for high risk clients and prepare positions for relations with the supervisory organ. Contact us — we will review your operations and prepare a solution that minimises the risks.