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Vance Center and Global Financial Integrity Address Virtual Asset Ecosystem Challenges in El Salvador
A two-day forum and workshop in San Salvador brought together key stakeholders to address virtual asset regulation, financial crime prevention, transparency and innovation opportunities.
The Vance Center and Global Financial Integrity (GFI) co-hosted a forum and workshop on November 20 and 21 in San Salvador, bringing together policymakers, private sector leaders, and international experts.
The November 20 forum, titled “Challenges and Opportunities for the Virtual Asset Ecosystem in El Salvador,” focused on fostering dialogue and collaboration on the regulatory, operational, and legal dimensions of virtual assets. Held at the Escuela Superior de Economía y Negocios (ESEN), the program provided a platform to explore the opportunities, risks, and innovations within El Salvador’s growing virtual asset ecosystem while addressing critical issues such as financial crime prevention, regulatory frameworks, and institutional integrity.
The first day provided a comprehensive overview of the opportunities and risks associated with virtual assets in El Salvador. The event had distinguished attendance and participation from a diverse range of groups, including representatives of the Bureau of International Narcotics and Law Enforcement Affairs (INL), the Financial Action Task Force of Latin America (GAFILAT), El Salvador’s Financial Investigation Unit (FIU), the National Commission of Digital Assets (CNAD), digital asset service providers, private sector, the banking industry, academia, and students.
The day began with the question “How Does an Effective Regulatory Framework Contribute to a Safer Ecosystem for Virtual Assets?” in which experts highlighted the critical role of regulation in ensuring a secure ecosystem while fostering innovation and economic growth. A second session, “How to Create an Efficient Suspicious Transaction Report?” that emphasized the importance of robust systems to identify and report suspicious activities, a vital tool for compliance and crime prevention. The panel on “The Private Sector’s Role in Countering Financial Crimes” underscored the significance of private-public partnerships in tackling illicit activities and maintaining financial integrity. Finally, the session on “New Business Models: Challenges and Opportunities in the Tokenization of Real-World Assets” explored the innovative use of virtual assets to represent physical assets, addressing both regulatory challenges and potential business opportunities.
The forum concluded with closing remarks from members of the Vance Center and GFI teams, who stressed the importance of multi-sector collaboration in building a resilient virtual asset ecosystem. A networking session followed, allowing participants to continuing exchanging ideas and fostering partnerships.
Panelists and speakers on the first day of sessions at the ESEN, November 21, 2024. Photo credit: Vance Center
The second day featured a hands-on workshop for participants including judges and prosecutors from key areas within their institutions. The program explored illicit financial flows involving virtual assets, with a focus on regulatory, investigative, and compliance strategies. It also highlighted key aspects of the virtual asset ecosystem and examined some of the risks and tools available to address potential criminal activities.
The day began with a session on “The Virtual Asset Ecosystem in El Salvador,” introducing foundational concepts of virtual assets, including regulation, adoption trends, and financial crime risks. The workshop then delved into “Prevention and Addressing Financial Crimes Based on the FATF’s 40 Recommendations” and their application to virtual assets, supported by regional case studies.
The workshop featured a session on mechanisms to address financial crimes involving virtual assets, November 22, 2024. Photo credit: Vance Center.
A highlight of the day was the session on “International Cooperation in Investigations,” which detailed mechanisms for cross-border collaboration, evidence exchange, and best practices in addressing virtual asset-related crimes. The workshop concluded with a practical session on “Combatting Fraud and Scams in Virtual Assets,” in which participants learned to use open-source intelligence tools and international databases to identify fraudulent activities and build cases against offenders.
As one of the first countries to adopt virtual assets as official currency, El Salvador has become a key player on the international stage, offering an example of how countries might approach balancing technological innovation with effective regulations and institutional support.
The two-day event highlighted the urgent need for tailored regulatory frameworks and international cooperation to address the unique challenges posed by virtual assets, in El Salvador and across the region. The sessions emphasized the importance of developing effective regulation, strengthening local and regional capacities to combat financial crimes, and fostering collaboration between the private sector, regulators, and international organizations.
Participants also underscored the critical role of institutional integrity in emerging markets like Latin America. They noted that strong institutions are essential for building trust, ensuring accountability, and creating a resilient environment for adoption of these technologies. The Vance Center and GFI reaffirmed their commitment to supporting these efforts to promote ethical, integrity-driven, and inclusive ecosystems in the region.
The Vance Center and GFI published an initial report, “The Virtual Assets Ecosystem in El Salvador: Strengthening Financial Integrity and Transparency,” in October 2023. The report is available in English and Spanish.
A second report is scheduled for publication in December 2024.
A full room listening to the workshop sessions, November 22, 2024. Photo credit: Vance Center