On-shore VASP in Benin

Benin's identification and verification framework was significantly updated in late 2025, including new conditions for establishing personal identification documents and the abolition of mandatory legalization for certain documents, per Décret N° 2025-678 and subsequent presidential reforms.

For BJ AML purposes, institutions must identify customers and (where required) beneficial owners and verify their identities on a risk‑based basis, which may be satisfied by customer certifications or existing reliable information; independent source documents such as national ID cards, passports, driver’s licenses, or proof of address are no longer mandatorily required in every case but are expected where the risk profile or inconsistencies warrant stronger verification.

For legal entities, obtain and record basic information such as the company name, proof of incorporation, legal form, registered office address, and the identity of directors; beneficial ownership information should also be identified and verified under applicable AML/KYC rules, but it is not generally available through ordinary public company-search tools.

Beneficial Ownership: Identify and take reasonable measures to verify the identity of the beneficial owner(s) of the customer.

Purpose and Intended Nature of Business: Understand the purpose and intended nature of the business relationship.

Ongoing Monitoring: Conduct ongoing due diligence on the business relationship and scrutinize transactions to ensure they are consistent with the VASP's knowledge of the customer, their business, and risk profile.

Risk-Based Approach: Apply a risk-based approach, meaning enhanced due diligence (EDD) for higher-risk situations (e.g., customers from high-risk jurisdictions, politically exposed persons - PEPs, complex transactions) and simplified due diligence (SDD) for lower-risk situations.

"Travel Rule" (FATF Recommendation 16): While implementation varies, VASPs are expected to obtain and transmit required originator and beneficiary information for virtual asset transfers (above a certain threshold), similar to traditional wire transfers.

Obligation to Report: Any VASP that suspects or has reasonable grounds to suspect that funds are the proceeds of a criminal activity, or are related to terrorist financing, must report promptly to the FIU.

No Tipping-Off: VASPs and their employees are prohibited from disclosing to the customer or third parties that an STR is being or has been filed.

Duration: Records of transactions and customer identification data must generally be kept for at least five (5) years after the business relationship is terminated or after the date of the transaction.

Type of Records: This includes all customer identification data (e.g., copies of identification documents), account files, business correspondence, and transaction data (e.g., amounts, dates, types of transactions, involved parties).

Availability: Records must be sufficient to permit the reconstruction of individual transactions and be made available to competent authorities upon request.

Benin’s Financial Intelligence Unit (FIU) is the Cellule Nationale de Traitement des Informations Financières (CENTIF). CENTIF is an administrative financial intelligence unit under the Minister of Finance, with financial and decision-making autonomy, responsible for receiving, analyzing, enriching and transmitting suspicious transaction reports and other relevant financial information to competent authorities for the purposes of combating money laundering and terrorist financing, and for coordinating and supporting national AML/CFT policy and strategy.

Central Bank of West African States (BCEAO): While the BCEAO is the central bank for UEMOA member states and regulates traditional financial institutions, it has issued warnings and statements regarding cryptocurrencies. It would likely be involved in any future licensing or specific regulatory framework for VASPs in the region.

Directive No. 02/2015/CM/UEMOA is a 2 July 2015 UEMOA directive on combating money laundering and terrorist financing, which was later transposed into member-state law and is referenced within the regional AML/CFT framework.

Benin's Constitution (Article 147) grants ratified treaties and agreements direct applicability and supremacy over domestic law, so regional directives such as the AML directive do not require transposition to have legal effect in Benin.

Not Legal Tender: Cryptocurrencies are not recognized as legal tender within the UEMOA zone.

Cryptocurrencies in Benin are not fully regulated as financial instruments, but the government and BCEAO have issued warnings and are tightening oversight, indicating active regulatory attention.

Prohibition for Regulated Entities: Financial institutions regulated by the BCEAO (banks, microfinance institutions, payment service providers) are generally prohibited from engaging in activities related to cryptocurrencies, including their issuance, trading, or custody.

Custodial License Requirements: There are no specific licenses for cryptocurrency custody providers in Benin. Any entity performing custody would likely be operating outside the traditional regulated financial services framework.

Segregation of Client Assets Rules: No specific rules exist mandating the segregation of client digital assets from the custodian's operational assets.

Insurance/Bonding Requirements: There are no specific insurance or bonding requirements for crypto custodians.

Cold Storage Mandates: No specific mandates dictate the use of cold storage or other security protocols for digital assets held in custody.

Legal Uncertainty: Activities are conducted in a regulatory grey area.

No Consumer Protection: There are no specific regulatory safeguards for clients using such services.

Operational Risk: Without clear guidelines, security, operational, and financial risks are heightened.

AML/CFT: While no specific crypto custody laws exist, general anti-money laundering and combating the financing of terrorism (AML/CFT) laws would still apply to any financial activity, and unregulated crypto activities are often viewed with heightened scrutiny by financial intelligence units.

No Crypto-Specific Rate: There are no specific capital gains tax rates for cryptocurrencies in Benin.

No Crypto-Specific Provisions: No specific income tax provisions for crypto.

No Crypto-Specific Reporting: There are no specific tax forms or declarations for cryptocurrency holdings or transactions in Benin.

Potential Interpretation: If the DGI were to view cryptocurrencies as a "movable asset" or a "financial instrument," any profits derived from their sale or exchange could theoretically be subject to general capital gains provisions.

Potential Interpretation: If cryptocurrencies are received as compensation for services, as salary, or as income from a business activity, they would likely be considered taxable income at their fair market value in West African CFA Franc (XOF) at the time of receipt.

VAT/GST Treatment (Taxe sur la Valeur Ajoutée - TVA)

No Crypto-Specific Rules: Benin's VAT laws do not specifically address cryptocurrencies. The standard VAT rate in Benin is 18%.

Developing Frameworks: Many African nations, including Benin, are still in the early stages of developing comprehensive regulatory frameworks specifically for cryptocurrencies. Enforcement often takes the form of general warnings or actions against broad financial fraud rather than specific crypto licensing violations.

Limited Public Reporting: Unlike jurisdictions with mature financial markets (e.g., USA, EU), individual enforcement actions, especially those involving relatively smaller sums or entities, are often not widely publicized by regulators in Benin or the wider UEMOA region.

Focus on Fraud: When actions occur, they are often initiated by law enforcement (police, judicial authorities) against individuals or groups involved in pyramid schemes or investment fraud using cryptocurrencies, rather than by a financial regulator against a crypto service provider for regulatory non-compliance.