Fiji Reaffirms Full Ban on Virtual Asset Service Providers Amid AML Concerns

Fiji has taken one of the toughest stances in the Pacific region by reaffirming a total prohibition on Virtual Asset Service Providers (VASPs). The move, announced in 2025 by the National Anti-Money Laundering Council and backed by the Reserve Bank of Fiji through amendments to the legal framework, represents one of the most restrictive approaches in the global debate on how to manage the risks of money laundering linked to cryptocurrencies, stablecoins, and other digital tokens. While many jurisdictions have pursued regulatory paths, Fiji has instead chosen outright prohibition, citing both its limited supervisory capacity and the vulnerabilities that virtual assets create for small financial systems exposed to criminal networks. This decision offers a revealing case study of what happens when a jurisdiction determines that its risk exposure is too high and opts to close the door completely.

The prohibition must be understood within the broader structure of Fiji’s anti-money laundering regime. The country is a member of the Asia-Pacific Group on Money Laundering and has obligations to comply with the Financial Action Task Force Recommendations, especially Recommendation 15, which directly addresses new technologies and virtual assets. FATF requires countries to assess the risks of virtual assets and establish mitigating measures that range from licensing and supervision to, in cases where supervisory and enforcement capacity is insufficient, outright prohibition. Fiji has chosen the latter. The Reserve Bank of Fiji Act was amended accordingly, granting the central bank explicit powers of enforcement and a clear legal foundation to impose penalties on anyone attempting to offer VASP services. These penalties are substantial, including not only financial fines but also custodial sentences, underscoring the position that violations are to be treated as serious financial crimes rather than mere regulatory infractions. The council’s reasoning is that allowing VASPs to operate without sufficient oversight could expose the country to laundering threats that extend beyond national borders, including terrorist and proliferation financing. This legal posture is consistent with Fiji’s Anti-Money Laundering and Countering the Financing of Terrorism Act, which criminalizes money laundering and imposes strict reporting duties on financial institutions.

The decision is rooted in several money laundering risks identified by Fiji’s authorities. The first is anonymity, which is inherent in many virtual assets. Even when exchanges require user information, funds can easily be moved to peer-to-peer wallets, mixers, or privacy tokens, making it nearly impossible to establish beneficial ownership. For criminal actors, this anonymity is invaluable. The second is the speed and borderless nature of virtual asset transactions. In a jurisdiction like Fiji, with limited resources, illicit funds could be shifted across multiple continents within minutes, long before any financial intelligence unit could detect suspicious patterns. The third concern involves exploitation by extremist groups. Virtual assets allow entities excluded from traditional banking to still raise and transfer money. The council has specifically pointed to proliferation financing risks, warning that virtual assets could enable procurement networks to acquire dual-use goods or weapons. This extends the issue from domestic criminality to international security. Finally, supervisory capacity itself is a core issue. Unlike larger economies with licensing regimes and advanced oversight systems, Fiji does not have the technological or enforcement infrastructure to regulate VASPs effectively. Attempting to do so prematurely could open systemic vulnerabilities, so prohibition has been deemed the safer course until capacity improves. Collectively, these risks create what officials describe as a high-threat scenario justifying the country’s firm stance.

The case must also be situated in global AML developments. Responses to VASP risks vary considerably across jurisdictions. The European Union has adopted a regulatory approach through its Markets in Crypto-Assets Regulation, reinforced by the Anti-Money Laundering Regulation requiring licensing and robust due diligence. In the United States, VASPs are treated as money services businesses under the Bank Secrecy Act, and must register and comply with AML obligations. Singapore applies a licensing regime through its Payment Services Act, subjecting VASPs to strict AML/CFT supervision. On the other extreme, countries such as China and Algeria have imposed complete bans. Fiji has now joined that latter group, aligning with jurisdictions that conclude the risks cannot yet be safely managed. This choice highlights an important truth in the AML debate: not every country has the capacity to administer complex regulatory regimes. Smaller economies often lack the financial intelligence resources, supervisory staffing, or technological infrastructure needed to contain crypto risks, leaving prohibition as the most viable option for fulfilling international obligations and safeguarding financial stability. Fiji’s move demonstrates that AML strategies must be proportionate to national realities. By banning VASPs, the country is signaling to global standard setters that it prefers caution to becoming a weak link in the international financial system.

Importantly, the prohibition is not meant to last indefinitely. The council has stated that the ban will be reviewed as international standards evolve and as Fiji develops stronger regulatory and technological capacity. The door is not closed permanently but rather secured until the necessary safeguards can be established. Fiji is already investing in strengthening its Financial Intelligence Unit and improving cooperation between regulators, law enforcement, and tax authorities. In time, the country may adopt a licensing model similar to that seen elsewhere, but for now the risks are judged to outweigh potential benefits. For AML professionals, this case serves as a reminder that money laundering threats are not uniform worldwide. A measure that may appear excessive in one jurisdiction can be entirely appropriate in another. For Fiji, prohibition functions as a safeguard, a temporary firewall protecting its financial system from exploitation by global laundering networks. The lesson is that anti-money laundering strategies must be tailored, risk-based, and pragmatic, striking a balance between innovation and the imperative of financial security.

By fLEXI tEAM