El Salvador brought digital asset service providers (Proveedores de Servicios de Activos Digitales, or PSADs) into a dedicated regulatory regime through the Digital Assets Issuance Law, Legislative Decree No. 643 of January 11, 2023, which created the National Commission of Digital Assets (CNAD) as the sector's registrar and supervisor [1]. AML/CFT obligations for the sector flow from the Law Against Money and Asset Laundering and from the UIF's Instructivo, which was reformed in May 2023 to add a chapter on virtual asset service providers, including the obligation to keep records of clients and operations revealing the origin and destination of virtual asset transactions [2]. On December 22, 2023, the CNAD Governing Council approved a risk management guide for the digital asset industry, which applies FATF Recommendation 16 and the Travel Rule to PSADs, requires originator PSADs to obtain, hold and transmit required originator and beneficiary information immediately and securely, and prohibits PSADs from omitting the collection and storage of Travel Rule information regardless of the transaction amount [3]

Key Regulatory Milestones in El Salvador

• June 9, 2021 — The Legislative Assembly approves the Bitcoin Law, giving legal status to bitcoin in the country (LEAD, recital IV) [1].
• October 27, 2021 — The UIF Instructivo for the prevention, detection and control of LDA/FT/FPADM is published in the Official Gazette (Acuerdo No. 380, D.O. No. 205, Tomo 433) [2].
• January 24, 2023 — The LEAD (Legislative Decree No. 643 of January 11, 2023) is published in the Official Gazette (D.O. No. 16, Tomo 438), entering into force eight days after publication (LEAD, Art. 47) [4].
• May 11, 2023 — Acuerdo No. 266 (D.O. No. 85, Tomo 439) reforms the UIF Instructivo, adding Chapter IV-B on virtual asset service providers, Articles 84-A to 84-C [2].
• December 22, 2023 — The CNAD Governing Council approves the LDA/FT/FPADM Risk Management Guide for the digital asset industry, applying the FATF Travel Rule to PSADs [3].

‍

1. Is cryptocurrency legal in El Salvador?

Yes. The Legislative Assembly approved the Bitcoin Law on June 9, 2021, legalizing this digital asset in the country and creating a new economic sector (LEAD, recital IV) [1]. The LEAD then established the legal framework for digital assets more broadly, defining a digital asset as a digital representation stored and transferred electronically using distributed ledger technology or similar technology, and expressly providing that digital assets are owned, exchanged, transferred, traded and promoted by individuals and legal entities (LEAD, Art. 3) [1]. Digital assets are not considered securities under Salvadoran law (LEAD, Art. 3) [1].

2. Are there AML crypto regulations in El Salvador?

Yes. PSADs are subject to the Law Against Money and Asset Laundering (LCLDA) and to the UIF Instructivo for the prevention, detection and control of money laundering, terrorist financing and proliferation financing [2]. Acuerdo No. 266 of May 5, 2023 added Chapter IV-B to the Instructivo, under which virtual asset service providers must maintain an anti-money laundering program compliant with the LCLDA, built on a risk-based approach and the principle of proportionality, covering customer due diligence policies, transaction limit policies, detection of unusual operations, reporting of suspicious operations, regulated operations reporting procedures, and the maintenance of client and operations records revealing the origin and destination of virtual asset transactions (Instructivo, Art. 84-B, numeral 1) [2]. The LEAD reinforces this at the licensing level: digital asset service providers must have systems to prevent, detect and disclose the risks of financial crimes such as money laundering and terrorist financing (LEAD, Art. 21) [1]. The CNAD guide of December 22, 2023 confirms the LCLDA, the LCLDA Regulation, the UIF Instructivo, the Special Law Against Acts of Terrorism, and the LEAD and its Regulations as the legal framework applicable to PSAD risk management [3].

3. Is the Crypto Travel Rule mandated in El Salvador?

Yes. The CNAD guide states that the rules on wire transfers in FATF Recommendation 16 apply to PSADs and to transfers of virtual assets under the "Travel Rule" [3]. The guide anchors the Travel Rule in Article 84-B, numeral 1, letter e) of the UIF Instructivo, which requires records of clients and operations revealing the origin and destination of transactions with digital assets [3]. Through the Travel Rule, the originating PSAD must obtain and hold required and accurate originator information and required beneficiary information, transmit this information immediately and securely to the beneficiary VASP or financial institution where applicable, and make the information available to competent authorities, including CNAD [3].

4. Who regulates cryptocurrency in El Salvador?

The National Commission of Digital Assets (CNAD) is the authority in charge of applying the LEAD, its regulations and the other rules governing public offerings of digital assets (LEAD, Arts. 6 and 7) [1]. CNAD's powers include authorizing, suspending, revoking and canceling the registration of digital asset service providers, examining and supervising their activities, and issuing technical standards, guides and instructions applicable to the LEAD and its regulations (LEAD, Art. 9) [1]. On the AML/CFT side, the Financial Investigation Unit (UIF) of the Attorney General's Office issues the Instructivo and receives regulated and suspicious operation reports [2]. Providers operating with bitcoin also register in the registry created by the Central Reserve Bank (Instructivo, Art. 84-A) [2].

5. Who is the Crypto Travel Rule Regulator in El Salvador?

CNAD supervises PSAD compliance with the Travel Rule. Its supervision visits evaluate the effectiveness of standard, intensified and simplified due diligence processes and of the Travel Rule for transfers, alongside processes for politically exposed persons, high-risk clients, higher-risk countries, and beneficial owner identification (CNAD guide, section 5.b.3) [3]. The guide was approved by the CNAD Governing Council under the powers of Article 9, letter o) of the LEAD [3]. Suspicious and regulated operations are reported to the UIF using the forms the UIF issues (Instructivo, Art. 84-C) [2].

FATF Travel Rule requirements in El Salvador

1. Are there licensing or registration requirements for VASPs in El Salvador?

Yes. Digital asset service providers regulated by the LEAD are only permitted to offer and provide digital asset services if registered with CNAD in the Registry of Digital Asset Service Providers (LEAD, Art. 18) [1]. Registrable services include the exchange of digital assets for fiat money or other digital assets, operating an exchange or trading platform, risk and price evaluation and subscription of issuances, placing digital assets on platforms or wallets, promoting and managing digital asset investment products, and, on behalf of third parties, transferring digital assets or the means to access or control them, safekeeping and custody, and receiving, transmitting and executing orders (LEAD, Art. 19) [1]. Applicants demonstrate their ability to offer the declared services, describe their organizational structure, implement appropriate cybersecurity standards, maintain a user support system and pay registration fees, with CNAD resolving applications within twenty business days of complete submission (LEAD, Arts. 12 and 20) [1].

In parallel, virtual asset service providers must register with the UIF as obligated subjects, in the Central Reserve Bank registry when operating with bitcoin, and with CNAD when operating with any other virtual asset (Instructivo, Art. 84-A) [2].

2. When does the Crypto Travel Rule go into effect in El Salvador?

The record-keeping obligation underpinning the Travel Rule entered the UIF Instructivo through Acuerdo No. 266 of May 5, 2023, published in the Official Gazette on May 11, 2023 (D.O. No. 85, Tomo 439), which added Article 84-B requiring PSADs to maintain records of clients and operations revealing the origin and destination of virtual asset transactions [2]. The full FATF Recommendation 16 Travel Rule framework for PSADs, including the obligation to transmit originator and beneficiary information immediately and securely to the beneficiary VASP, was set out in the CNAD risk management guide approved by the CNAD Governing Council on December 22, 2023 [3].

Complying with the FATF Crypto Travel Rule in El Salvador

1. What is the minimum threshold for the Crypto Travel Rule in El Salvador?

There is no minimum threshold. Under no circumstance is a PSAD permitted to omit collecting and storing the information used for the Travel Rule in transfers of digital assets, regardless of the amount of the operation (CNAD guide, section 2) [3]. Separately, the designated threshold for an occasional transaction above which PSADs must perform customer due diligence is US$1,000.00 (CNAD guide, section 2) [3].

2. What personally identifiable information (PII) is required to be shared for the Crypto Travel Rule in El Salvador?

Through the Travel Rule, the originating PSAD must obtain and hold required and accurate originator information and required beneficiary information, transmit this information to the beneficiary VASP or financial institution immediately and securely, and make the information available to competent authorities, including CNAD (CNAD guide, section 2) [3]. The guide lists the following party-level information for inclusion in the Travel Rule record:

‍

The guide also lists the following transaction-level information for inclusion in the Travel Rule record: the date of the operation, the type and amount of each virtual currency, each reference number related to the transaction with a function equivalent to an account number, each transaction identifier including the sending and receiving addresses, and the exchange rates used and their source (CNAD guide, section 2) [3].

Beyond transmission, Article 84-B of the Instructivo requires PSADs to maintain records of clients and operations revealing the origin and destination of virtual asset transactions, accurate records reflecting the provider's assets, liabilities and equity, and client account records reflecting the data obtained from each client and the information for each transaction (Instructivo, Art. 84-B, numerals 1.e, 4 and 5) [2]. PSADs also identify and verify the beneficial owner of legal persons and legal structures, obtaining the identity of the natural persons who ultimately hold the majority shareholding, an obligation the CNAD guide flags as having special relevance in transfers and exchanges of digital assets (Instructivo, Art. 21-A, and CNAD guide, section 3) [2] [3].

3. What are the non-custodial or self-hosted wallet requirements in El Salvador?

To our knowledge, El Salvador has not yet specified the requirements for transactions involving non-custodial or self-hosted wallets.

Why choose Notabene for Crypto Travel Rule Compliance in El Salvador

El Salvador's framework leaves PSADs no de minimis relief: Travel Rule information must be collected and stored on every digital asset transfer regardless of amount, transmitted immediately and securely to the counterparty institution, and kept available for CNAD and the UIF. Notabene Transact answers the question at the heart of this obligation, WHO is behind a blockchain address, connecting PSADs to a network of 290+ regulated entities for counterparty identification, Travel Rule data exchange and pre-transaction authorization through a single integration. With CNAD supervision visits expressly testing the effectiveness of Travel Rule processes alongside due diligence and beneficial ownership controls, Notabene gives compliance teams in El Salvador an auditable, end-to-end record of every transfer, from counterparty identification through data transmission, ready for supervisory review.

‍