Colombia Mandates Users and Exchanges to Report Crypto Transactions

New Crypto Law

February 7, 2022

Reading Time: 2 minutes

The government of Colombia is seeking to impose some regulations on cryptocurrency. Users and exchanges must now report their crypto transactions to the UIAF, the anti-money laundering unit in Colombia.

New Crypto Law to Regulate Crypto Trading Activities in Colombia

The new crypto law passed is called Resolution 314. It requires all cryptocurrency transactions above $150 or those made with multiple tokens whose value exceeds $450 to be reported to the UIAF.

Colombia intends to use this new crypto law to impose regulations on the industry. Resolution 314 aims to control the vices prevalent in the crypto industry, such as money laundering and terrorism financing.

Colombian tax regulator DIAN also recently stated that it was investigating tax evasion through crypto trading. The new law could be a way of extending tax obligations to crypto trading.

Colombia’s crypto resolution states explicitly that virtual assets have created a situation that merits the intervention of the UIAF. According to the law, the crypto industry has grown rapidly in the past years. In 2019, $124 million transactions were registered in the Bitcoin national market, an increase of almost 1.7 times what was recorded in 2018.

The resolution continues by acknowledging that crypto transactions are not illegal in Columbia. However, they are a loophole for illicit activities because of the anonymity in the trades. Additionally, the rapid growth presents newfound liquidity that is attractive to criminals.

Penalty for Non-Compliance

While individual users are mandated to report their transactions, exchanges will have to whistle-blow any suspicious activity from the customers. Colombia’s crypto resolution states that exchanges would present to the UIAF a detailed list of operations the platform deemed unusual and the specific users associated with said transactions.

Colombians and crypto exchanges operating in Colombia should beware of consequences for non-compliance to Resolution 314. Parties with transactions detected to involve money laundering will pay a penalty of between 100 to 400 minimum monthly wages.

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