Fiji has taken one of the most restrictive steps in the Pacific region by reaffirming a full prohibition on Virtual Asset Service Providers, commonly referred to as VASPs. The decision was announced in 2025 by the country’s National Anti-Money Laundering Council and was implemented with the support of the Reserve Bank of Fiji through amendments to its legal framework. The move represents an extreme approach in the global debate on how to manage money laundering risks associated with cryptocurrencies, stablecoins, and other forms of digital tokens. While many jurisdictions have chosen to regulate, Fiji has chosen to prohibit, citing its limited supervisory capacity and the severe vulnerabilities virtual assets create when criminal networks operate in small financial systems. This case deserves closer study because it shows what happens when a jurisdiction assesses its risk exposure as too high and decides to shut the door entirely.

Legal and AML Context of the Ban

The prohibition has to be viewed through the lens of Fiji’s overall anti-money laundering framework. Fiji is a member of the Asia-Pacific Group on Money Laundering and has obligations to align with the Financial Action Task Force Recommendations, particularly Recommendation 15 which deals specifically with new technologies, including virtual assets. The FATF standard requires countries to understand the risks of virtual assets and to put in place measures to mitigate them. Those measures can range from licensing and supervision of VASPs to outright prohibition if supervisory and enforcement mechanisms are not strong enough to manage the risks. Fiji has opted for prohibition. The Reserve Bank of Fiji Act was updated to reflect this, giving the central bank clear enforcement powers and providing the legal basis for penalties against individuals or firms who attempt to provide VASP services. The penalties are significant, including both financial fines and custodial sentences, showing that the country views violations not as regulatory slip-ups but as serious financial crime offences. The council’s legal rationale is that allowing VASPs to operate without sufficient capacity to supervise them could expose the country to money laundering threats that go beyond its borders, including terrorist financing and proliferation financing. This legal stance is in line with the broader framework of Fiji’s Anti-Money Laundering and Countering the Financing of Terrorism Act, which criminalizes laundering and places reporting obligations on financial institutions.

Money Laundering Risks that Motivated the Decision

Fiji’s prohibition is built on several specific money laundering risks. The first is the anonymity built into many virtual assets. Even when exchanges require customer information, users can move assets into peer-to-peer wallets, mixers, or privacy-focused tokens. This creates multiple layers that obscure beneficial ownership. For criminal groups this anonymity is invaluable. The second risk is the speed and borderless nature of transactions. In a jurisdiction like Fiji, with limited resources, a criminal organization could move illicit funds across several continents within minutes using digital tokens, long before any financial intelligence unit could detect suspicious activity. The third risk is the potential exploitation by extremist networks. Virtual assets can be used to bypass traditional financial channels, meaning groups that are otherwise excluded from banks can still raise and move money. The council has specifically highlighted proliferation financing, noting that virtual assets could facilitate procurement networks seeking dual-use goods or weapons. This extends the risk beyond domestic crime to regional and global security. Finally, there is the challenge of supervisory capacity. Unlike larger jurisdictions that have built licensing regimes, Fiji does not currently have the technological or enforcement infrastructure to regulate VASPs effectively. Attempting to regulate without capacity could open systemic vulnerabilities, so prohibition is seen as the safer option until systems improve. These factors combine to present a high-risk scenario that justifies the strong policy stance.

How the Case Fits into Global AML Developments

Globally, responses to VASP-related risks vary widely. The European Union has introduced a regulatory regime under its Markets in Crypto-Assets Regulation, supported by the Anti-Money Laundering Regulation which will require licensing and strict due diligence controls. The United States applies its Bank Secrecy Act obligations to VASPs, treating them as money services businesses that must register and comply with AML rules. Singapore has implemented a licensing regime through its Payment Services Act, requiring VASPs to apply for approval and subjecting them to strict AML/CFT supervision. On the other end of the spectrum, countries like China and Algeria have enforced outright bans. Fiji has now joined that latter group, aligning itself with jurisdictions that believe the risks cannot be safely managed within their systems at present. This highlights a key point in the global AML debate: not every country has the same capacity to implement complex regulatory frameworks. Smaller economies often lack the financial intelligence, supervisory staffing, or technological tools to manage crypto risks, and prohibition becomes the most viable way to meet international obligations while protecting domestic financial stability. The Fiji case therefore underscores the principle that AML strategies must be proportionate to national contexts. By prohibiting VASPs, Fiji is signaling to global standard setters that it prefers to err on the side of caution rather than risk being exploited as a weak point in the global financial system.

Safeguards for the Future

The decision to prohibit VASPs is not meant to be permanent. The council has made clear that the ban will be reviewed as international standards evolve and as Fiji strengthens its regulatory and technological infrastructure. This means the door is not closed forever, but rather locked until Fiji builds the right safeguards. The country has already invested in strengthening its Financial Intelligence Unit and in improving cooperation between law enforcement, regulators, and tax authorities. Over time, Fiji may move toward a licensing model similar to those adopted in other jurisdictions, but for now the risks outweigh the benefits. For AML professionals, this case is an important reminder that money laundering threats are not uniform across jurisdictions. A measure that seems excessive in one context may be appropriate in another. For Fiji, the prohibition represents a safeguard, a temporary firewall protecting the financial system from being exploited by global money laundering networks. The lesson is that anti-money laundering strategies must be tailored, risk-based, and pragmatic, balancing innovation with the imperative of financial security.

Related Links

• Reserve Bank of Fiji
• Fiji Financial Intelligence Unit
• Asia-Pacific Group on Money Laundering
• Financial Action Task Force
• Fiji Ministry of Justice

Other FinCrime Central Articles About Crypto Bans

• EU’s Bold Move: Privacy Coins and Anonymous Crypto Banned by 2027
• Nepal’s Battle Against Crypto Fraud: A Growing Threat Despite a Ban
• Summer Series #2. Crypto Under Fire: Enforcement, Risks & Regulations

Source: Bitcoin.com, by Terence Zimwara

Some of FinCrime Central’s articles may have been enriched or edited with the help of AI tools. It may contain unintentional errors.

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