Economic substance is the answer to a practical question: can the Georgian applicant explain, control and evidence the business it asks the National Bank to register? A company certificate and rented address do not by themselves show where decisions, records, people and systems live.
The head office is a supervisory access point
The VASP’s actual head office must be in Georgia. The premises should support the organisation described in the application and allow access to required information, documents and electronic systems. The office plan should address working space, secure access, records, connectivity, meetings, business continuity and the people expected to work there.
Management must happen where the company says it happens
Substance is visible through decisions. Board and management minutes, approvals, risk discussions, product changes, provider oversight, incidents and escalation should show the Georgian company exercising genuine authority. A parent or outsourced provider may support the operation, but contracts and governance must leave the registered VASP capable of understanding and controlling what is done in its name.
People and workload must agree
The organisation plan should translate projected customers, countries, volumes, channels, cash exposure and operating hours into roles and capacity. It is difficult to reconcile an ambitious retail forecast with a single part-time individual and no local operations. Conversely, substance is not measured by headcount alone: responsibilities, competence, access and evidence matter.
Systems and records must be usable from Georgia
The NBG can require access to the electronic system and a functioning demonstration. Local management should be able to trace a customer from onboarding through sanctions screening, wallet or order activity, KYT alerts, cases, approvals, reporting, reconciliation and audit logs. “The vendor operates it abroad” is not an adequate control description.
Outsourcing does not outsource accountability
Cloud, KYC, blockchain analytics, custody, liquidity, security and support providers can be part of the model. The VASP still needs due diligence, contracts, data and access rights, service levels, incident notification, continuity arrangements, monitoring and a route to retrieve evidence. Critical dependencies belong in management information and change control.
A practical substance file
- Title or lease/right-to-use evidence for the head office.
- Office plan, security, connectivity and supervisory-access procedure.
- Organisation chart, job descriptions, contracts and competence records.
- Presence records and delegation/cover arrangements.
- Board and management calendar, reserved matters and reporting packs.
- System-access matrix, vendor contracts and evidence-retrieval tests.
- Budget connecting premises, payroll, systems and outsourced costs to the three-year plan.
Substance also affects banking and tax analysis
Banks and providers independently assess whether ownership, management and operations are credible. Tax residence, permanent establishment, payroll and transfer-pricing questions also follow actual people, contracts and value creation. No single “substance package” answers every model; the facts must be designed together.
Official materials used for this guide
These links support the editorial baseline; the explanation above is written for founders and operators. Current consolidated legislation and later official instruments take priority.