Botswana

**Licensing Regime:** Botswana operates under a strict **licensing regime** for Virtual Asset Service Providers. This means that any entity wishing to conduct VASP activities in or from Botswana must apply for and obtain a specific license from NBFIRA before commencing operations. It is not merely a registration process; it involves a thorough application, due diligence, and ongoing compliance.

The Virtual Assets Act, 2025 now provides the overarching legal framework for virtual assets and VASPs in Botswana, vesting supervisory powers in NBFIRA and requiring licensing of VASPs.

**Virtual Assets Regulations, 2023 (VAR 2023):** These regulations provide the detailed operational and licensing requirements, including application procedures, capital requirements, AML/CFT obligations, and ongoing supervisory standards. The VAR 2023 became effective on **May 26, 2023**.

**Exchanges (Exchange between Virtual Assets and Fiat Currencies / Exchange between one or more forms of Virtual Assets):**

Entities operating cryptocurrency exchanges that allow users to buy/sell virtual assets with fiat currency (e.g., BWP, USD) or trade one virtual asset for another (e.g., Bitcoin for Ethereum) fall directly under the VASP definition and require a license.

**Custody Providers (Safekeeping and/or administration of Virtual Assets or Instruments enabling control over Virtual Assets):**

Entities offering custodial services for virtual assets, meaning they hold or control private keys on behalf of clients, are considered VASPs and must be licensed. This applies to both institutional and retail custody solutions.

**Payment Processors (Transfer of Virtual Assets):**

Entities that facilitate the transfer of virtual assets on behalf of another natural or legal person (e.g., sending/receiving virtual assets as a payment service, or processing virtual asset transactions) are considered VASPs and require a license. This encompasses services that act as intermediaries for virtual asset payments.

Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset (e.g., ICO/STO services).

Any other activity as prescribed by the Minister through regulations.

**Legal Entity and Local Presence:**

Applicants must be a company **incorporated in Botswana** under the Companies Act.

They must maintain a **physical office** in Botswana.

Senior management and key personnel are expected to be based in Botswana or demonstrate sufficient local oversight.

The VAR 2023 specifies minimum capital requirements based on the scope of activities:

**Principal VASP License:** **BWP 500,000** (Botswana Pula) in unimpaired capital. This typically covers the full range of VASP activities.

**Limited VASP License:** **BWP 200,000** in unimpaired capital. This may be for VASPs with a narrower scope of activities or those determined by NBFIRA to pose lower risk.

In addition to capital, NBFIRA may require a **security deposit** or other financial guarantees to protect clients.

Botswana is actively tightening its AML/CFT financial sanctions regime to address identified weaknesses, indicating the framework is being reformed rather than remaining a stable cornerstone already fully aligned with FATF standards.

**Robust Policies and Procedures:** VASPs must implement comprehensive internal AML/CFT policies, procedures, and controls.

**AML/CFT Compliance Officer:** Appointment of a qualified and experienced AML/CFT Compliance Officer, approved by NBFIRA, who reports to senior management and the Board.

**Customer Due Diligence (CDD):** Implementing strong CDD measures for all customers, including identifying and verifying the identity of natural and legal persons, and beneficial owners.

**Enhanced Due Diligence (EDD):** Applying EDD for higher-risk customers or transactions.

**Record Keeping:** Maintaining records of customer identification data, transaction data, and business correspondence for at least 5 years.

**Suspicious Transaction Reporting (STRs):** Reporting suspicious transactions and activities to the Financial Intelligence Agency (FIA) in Botswana.

**Sanctions Compliance:** Screening customers and transactions against national and international sanctions lists.

**Travel Rule:** Compliance with the FATF Travel Rule for virtual asset transfers, requiring VASPs to obtain and transmit originator and beneficiary information.

**Governance, Management, and Fit & Proper:**

**Fit and Proper Requirements:** Directors, senior management, and significant shareholders (e.g., 10% or more ownership) must meet NBFIRA's "fit and proper" criteria, including good repute, integrity, competence, and financial soundness.

**Organizational Structure:** A clear and effective organizational structure with well-defined lines of responsibility.

**Risk Management:** Robust frameworks for identifying, assessing, monitoring, and mitigating all relevant risks, including operational, financial, cyber, and legal risks.

Botswana's IT infrastructure, systems, and controls have been found failing and vulnerable, prompting the passage of the Cybersecurity Act, 2025, to address gaps in cybersecurity coordination and infrastructure reliability.

**Cybersecurity:** Comprehensive cybersecurity policies and measures to protect customer data and virtual assets.

**Business Continuity and Disaster Recovery:** Adequate plans to ensure continuous operation and recovery in case of disruptions.

Measures to protect client assets and information.

Clear and transparent disclosure of fees, risks, and terms of service.

A detailed, viable business plan outlining the VASP's operations, target market, financial projections, and compliance strategy.

**Pre-Application Consultation (Recommended):** NBFIRA encourages prospective applicants to engage in an initial consultation to discuss their proposed business model and understand the regulatory requirements.

**Preparation of Application:** The applicant compiles a comprehensive application package, including:

Duly completed application forms (prescribed by NBFIRA).

Legal entity documents (certificate of incorporation, memorandum, and articles of association).

Audited financial statements are required for non-exempt existing entities in Botswana, and since the Companies (Amendment) Act, 2025, this requirement now explicitly includes dormant companies as well.

Proof of capital (e.g., bank statements).

AML/CFT policies and procedures manual.

Botswana is undertaking a decisive reset of its financial integrity systems to address weaknesses in anti-money laundering and counter-terrorism financing frameworks, indicating that the risk management framework is being actively changed and strengthened.

CVs, "fit and proper" declarations, and police clearances for directors, senior management, and significant shareholders.

Fee schedule and client agreement templates.

**Submission of Application:** The complete application package is submitted to NBFIRA.

**Due Diligence and Review by NBFIRA:** NBFIRA reviews the application, conducts due diligence on the entity and its key personnel, and may request additional information or clarifications. This may involve interviews.

**Decision and Licensing:** If all requirements are met and NBFIRA is satisfied, it will grant a VASP license. NBFIRA has the discretion to grant or refuse a license.

**Ongoing Compliance:** Licensed VASPs are subject to ongoing supervision by NBFIRA, including regular reporting, audits, and compliance checks.

**Virtual Assets Act, 2022 (VAA 2022):**

**Virtual Assets Regulations, 2023 (VAR 2023):**

These regulations detail the implementation of the VAA. They were gazetted on May 26, 2023.

**Non-Bank Financial Institutions Regulatory Authority (NBFIRA) Website:** https://www.nbfira.org.bw/

This is the main regulatory body. Their website is the authoritative source for application forms, guidance, and updates.

Look for sections related to "Virtual Assets" or "Licensing Requirements" under "Regulatory Frameworks" or "Supervised Entities."

**NBFIRA Virtual Assets Information Page (if available):** (Specific direct link to VA section if found, otherwise the main page is the entry point). NBFIRA generally publishes directives and application documents for regulated entities.

**Financial Intelligence Act:** This act forms the basis for Botswana's broader AML/CFT framework, which VASPs must also comply with.

**Financial Intelligence Agency (FIA):** https://www.fia.org.bw/ (For AML/CFT guidance and STR reporting)

shares or debentures of a company;

stocks, bonds, or other instruments creating or acknowledging indebtedness;

any right, warrant, or option in respect of a share, debenture, stock, bond, or other instrument;

Under Botswana's Virtual Assets Act, 2025, crypto instruments are regulated as a distinct class of virtual assets, not subsumed under the general definition of securities or capital market instruments.

**An investment of money (or other asset):** Purchasers exchange value for the token.

**In a common enterprise:** The funds are pooled, and the success of the token's value or the project behind it is interdependent among investors.

**With an expectation of profit:** Purchasers expect to derive financial gain from their ownership of the token (e.g., through appreciation, dividends, staking rewards, governance rights leading to value).

**Derived from the efforts of others:** The expected profits or increase in value primarily come from the entrepreneurial or managerial efforts of the issuer or a third party (e.g., the development team, foundation, or management of the underlying project).

**Investment Tokens (Security Tokens):** Tokens explicitly designed to represent an ownership stake in an enterprise, a share in profits, voting rights in a company, or a claim on future revenues are almost certainly classified as securities. This includes most Initial Coin Offerings (ICOs) that promise future returns or equity-like participation.

**Utility Tokens (with investment characteristics):** While a "pure" utility token (solely providing access to a product or service) may not be a security, many utility tokens are marketed with investment potential, where their value is tied to the success of a platform built and managed by others. If the primary motive for purchase is speculative profit derived from the efforts of the issuer, it would likely be deemed a security.

**NFTs (with investment characteristics):** Non-Fungible Tokens that merely represent digital art or collectibles might not be securities. However, NFTs that confer rights to passive income, fractional ownership in a real-world asset managed by a third party, or are part of a broader investment scheme would likely be classified as securities.

**Payment Tokens/Cryptocurrencies (e.g., Bitcoin, Litecoin):** Generally, these are not considered securities if their primary function is as a medium of exchange or store of value, and their value is not derived from the managerial efforts of a central issuer or common enterprise in the same way. These would fall under the Virtual Assets Act for AML/CFT purposes but not as securities.

**Registration/Prospectus Requirements:** The issuer would generally be required to register the security with NBFIRA and issue a prospectus in accordance with the **Securities Act**. A prospectus must contain all material information necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profits and losses, and prospects of the issuer and the rights attaching to the securities.

**Exemptions:** The Securities Act provides for certain exemptions from prospectus requirements, such as offerings to sophisticated investors, private placements, or offerings to a limited number of persons. The issuer would need to ensure they strictly meet the criteria for any claimed exemption.

**Licensing:** Issuers, and any intermediaries involved in the offering, may need to be licensed by NBFIRA as securities dealers, brokers, or investment advisors, depending on their activities.

**Exchange Licensing:** Any platform facilitating the secondary trading of such tokens would likely need to be licensed by NBFIRA as a **securities exchange** or operate under an exemption.

**Broker-Dealer Licensing:** Entities facilitating the buying and selling of these tokens on behalf of clients (brokers) or trading for their own account (dealers) would need to be licensed by NBFIRA.

**Market Conduct Rules:** Standard market conduct rules for securities trading, including prohibitions against market manipulation, insider trading, and other illicit practices, would apply.

**AML/CFT:** Even if not a security, all secondary trading activities involving virtual assets are subject to the AML/CFT requirements under the **Virtual Assets Act, 2022**, meaning VASPs (exchanges, custodians, etc.) must be licensed by NBFIRA and adhere to strict reporting and due diligence obligations.

Issue directives to cease illegal activities.

Impose administrative penalties and fines.

Seek court orders for injunctions or disgorgement of illicit gains.

Cooperate with law enforcement for criminal prosecution in cases of fraud.

(Look for circulars, press releases, or guidance under 'Publications' or 'News').

This act can typically be found on the Attorney General's Chambers website for Botswana laws, or via legal databases. A direct government URL for the latest consolidated version may vary, but here's a common way to find legislation: https://www.botswanalaws.com/ (You would search for "Securities Act").

This is a newer act. You would similarly look for it on the Attorney General's Chambers site or legislative databases.

An example link to a legal database that often hosts these (though may require subscription): https://www.lexisnexis.com/ or similar regional legal platforms.

Botswana Government Gazette often publishes new acts. For example, it came into force via the Statutory Instrument No. 71 of 2022.

These regulations accompany the VAA and provide detailed rules for VASPs.

Again, found via legislative resources.

**Proceeds of Serious Crime Act (POCA), Cap 08:06:** This is the overarching legislation that criminalizes money laundering and terrorist financing, and provides for the confiscation of proceeds of crime.

**Financial Intelligence Act (FIA), No. 17 of 2019:** This Act establishes the Financial Intelligence Agency (FIA) and outlines the obligations of accountable institutions (which now explicitly include VASPs) regarding customer due diligence, record-keeping, and suspicious transaction reporting. It replaced the 2009 Act.

**Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Guidelines:** Issued by the FIA and NBFIRA, these guidelines provide specific instructions for regulated entities, including VASPs, on how to implement their AML/CFT obligations, including sanctions compliance.

The Non-Bank Financial Institutions Regulatory Authority (NBFIRA) Act, 2006 establishes NBFIRA as the prudential regulator for non-bank financial institutions in Botswana. There is no Botswana-specific evidence that VASPs are explicitly included under NBFIRA’s purview.

**NBFIRA's Virtual Assets Business Regulatory Framework and Guidance Notes:** NBFIRA has issued a comprehensive framework and specific guidance notes, such as the "Guidance Notes on Anti-Money Laundering and Combating the Financing of Terrorism for Virtual Asset Service Providers" (e.g., published in November 2022), which directly detail AML/CFT obligations for VASPs. These are crucial for specific requirements.

**Identification and Verification of Customers:**

National identity number (e.g., Omang for citizens), passport number, or other official identification document number.

Residential address (verified with utility bills, bank statements, or other official documents).

Source of funds and source of wealth (especially for high-risk customers or large transactions).

Purpose and intended nature of the business relationship.

**Legal Entities/Arrangements (e.g., companies, trusts):**

Full legal name and trading name.

Registration number and legal form.

Principal place of business and, if different, operational address.

Names of directors, partners, or trustees.

Memorandum and Articles of Association (or similar constitutive documents).

Verification that the entity has not been dissolved, wound up, or struck off.

Identification of individuals authorized to act on behalf of the entity.

VASPs must identify and verify the identity of the beneficial owner(s) of customers, including for legal persons and legal arrangements.

For legal persons, this typically means identifying individuals who ultimately own or control **25% or more** of the shares or voting rights, or otherwise exercise control over the entity.

For trusts or other legal arrangements, identifying the settlors, trustees, protectors, beneficiaries, or any other person exercising ultimate effective control.

**Ongoing Due Diligence and Monitoring:**

Monitoring the business relationship and transactions undertaken throughout the course of the relationship to ensure they are consistent with the VASP's knowledge of the customer, their business, risk profile, and, where necessary, the source of funds.

Keeping customer information up-to-date and verifying it periodically.

**Simplified Due Diligence (SDD):** May be applied in low-risk scenarios (e.g., government entities, publicly listed companies) where the risk of money laundering or terrorist financing is minimal.

**Enhanced Due Diligence (EDD):** Required for higher-risk scenarios, including:

Politically Exposed Persons (PEPs) and their family members/close associates.

Customers from high-risk geographic locations (e.g., countries under FATF monitoring or sanctions).

Customers involved in high-risk activities or complex structures.

Transactions involving large amounts of virtual assets or unusual patterns.

Specific measures for EDD may include obtaining additional information on the customer, beneficial owner, source of funds/wealth, purpose of transactions, and senior management approval for establishing or continuing the relationship.

**"Travel Rule" (FATF Recommendation 16, extended to VASPs by R.15):**

VASPs are generally required to obtain and transmit certain originator and beneficiary information for virtual asset transfers above a de minimis threshold (often equivalent to USD/EUR 1,000).

**Originator Information:** Name, account number (or unique transaction identifier), physical address, or national ID number, or customer identification number, or date and place of birth.

**Beneficiary Information:** Name, account number (or unique transaction identifier), and physical address, or national ID number, or customer identification number, or date and place of birth.

Botswana's Data Protection Act 2024 sets specific conditions on storage and disclosure of personal data to authorities, replacing any prior blanket requirement to store and make information available upon request.

**Reporting Obligation:** A VASP must immediately report any transaction (or attempted transaction) where they know, suspect, or have reasonable grounds to suspect that:

The transaction involves funds derived from criminal activity (money laundering).

The transaction is linked to terrorist financing.

The transaction is otherwise suspicious based on customer behavior, transaction patterns, or other red flags.

**No Tipping-Off:** It is prohibited to inform the customer or any third party that a report has been or will be made to the FIA.

**Protection for Reporters:** VASPs and their employees are protected from criminal or civil liability for reporting suspicious transactions in good faith.

**Customer Identification Records:** All documents and information obtained during the CDD process (e.g., copies of ID, proof of address, beneficial ownership information).

**Transaction Records:** Details of all virtual asset transactions, including:

Amount and value of the transaction.

Originator and beneficiary information (as per the Travel Rule).

Sending and receiving virtual asset addresses/identifiers.

Any other relevant information relating to the transaction.

**Business Correspondence:** Records of communications with customers.

**Suspicious Transaction Reports:** Copies of all STRs submitted to the FIA, along with any internal analyses or decisions made.

**Retention Period:** Records must be retained for a minimum of **five (5) years** after the business relationship has ended or after the date of the occasional transaction.

**Role:** NBFIRA is the prudential regulator responsible for the licensing, supervision, and enforcement of AML/CFT and other regulatory requirements for VASPs. They conduct inspections, issue directives, and impose sanctions for non-compliance.

**Role:** The FIA is Botswana's Financial Intelligence Unit (FIU). It is responsible for receiving, analyzing, and disseminating suspicious transaction reports to law enforcement agencies for investigation and prosecution. The FIA also provides guidance to accountable institutions on AML/CFT matters.

**The Virtual Assets Act, 2022:** This is the most specific legislation regulating virtual assets and VASPs in Botswana. It brings VASPs under the regulatory oversight of the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) and mandates AML/CFT compliance.

**Legal Reference:** Virtual Assets Act, 2022. (Official Government Gazette link is often dynamic or paywalled, but the Act is publicly available through legal databases. A general search like "Botswana Virtual Assets Act 2022" will lead to reputable legal resources).

**The Financial Intelligence Act (FIA):** This Act establishes the Financial Intelligence Agency (FIA) as the central national agency responsible for receiving, analyzing, and disseminating financial intelligence to combat money laundering and terrorist financing. It sets out reporting obligations for financial institutions and designated non-financial businesses and professions (DNFBPs), which now explicitly include VASPs.

**Legal Reference:** Financial Intelligence Act, 2019 (as amended).

**Link:** Botswana Financial Intelligence Act 2019 (FIA Website)

**The Proceeds and Instruments of Crime Act (PICA):** This Act deals with the identification, tracing, freezing, and forfeiture of proceeds of crime, including those related to money laundering and terrorist financing.

**Legal Reference:** Proceeds and Instruments of Crime Act, 2014.

**Link:** Botswana Proceeds and Instruments of Crime Act 2014 (FIA Website)

**Link (FIA Guidance):** FIA Botswana Publications (look for relevant sector-specific guidelines, if available, or general AML/CFT guidance)

**Direct Obligation:** As a member state of the United Nations, Botswana is legally obligated to implement all UN Security Council Resolutions (UNSCRs), including those imposing targeted financial sanctions (TFS) related to terrorism, proliferation financing (e.g., WMD), and other threats to international peace and security.

**Mechanism:** The FIA and other relevant authorities issue directives to financial institutions (including VASPs) to freeze assets and prohibit transactions with individuals and entities designated by the UN Sanctions Committees (e.g., Al-Qaida, ISIS, Taliban, DPRK, Iran, etc.).

**VASP Requirement:** VASPs operating in Botswana must have systems and procedures in place to screen customers and transactions against the consolidated UN sanctions lists. Any match requires immediate freezing of funds/VAs and reporting to the FIA.

**Legal Basis:** This obligation is implicitly enforced through the FIA Act (mandating AML/CFT compliance) and the various regulations issued by the Ministry responsible for foreign affairs, which give effect to international obligations.

**OFAC (U.S.) and EU Sanctions:**

Extraterritorial Reach: OFAC (Office of Foreign Assets Control) sanctions from the United States and sanctions from the European Union apply extraterritorially. This means that even if a VASP is based solely in Botswana, it may fall under U.S. or EU jurisdiction if it:

Deals with U.S. persons or EU persons.

Processes transactions denominated in USD or EUR.

Uses U.S. or EU-based infrastructure (e.g., cloud servers, payment processors).

Engages in activities that transit through U.S. or EU financial systems.

**VASP Requirement (Best Practice/Risk Mitigation):** While not *directly* mandated by Botswana law for non-UN sanctions, a prudent VASP in Botswana will screen against OFAC (SDN List, SSIL, etc.) and EU sanctions lists as a crucial part of its risk management strategy. Failure to do so could lead to:

Loss of access to international financial services (e.g., correspondent banking, fiat on/off-ramps).

Potential enforcement actions by U.S. or EU authorities if a nexus is established.

The Virtual Assets Act and FIA Act require VASPs to implement "adequate and appropriate policies, procedures, and controls to mitigate money laundering and terrorist financing risks," which broadly supports the screening against all major sanctions lists as a best practice.

**Conduct Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD):** This includes identifying the beneficial owners of accounts.

**Screen against Sanctions Lists:** Before onboarding new customers and on an ongoing basis, VASPs must screen their customers (including beneficial owners) and, where feasible, the counterparties to transactions, against:

**FATF Public Statement Lists:** These identify high-risk jurisdictions or those with strategic AML/CFT deficiencies (often referred to as "grey list" or "black list" countries). While not sanctions, they require enhanced due diligence.

**OFAC and EU Sanctions Lists:** Highly recommended as a risk management measure to avoid potential international repercussions.

**Real-time/Automated Screening:** For virtual assets, given the speed of transactions, effective screening often requires automated tools that can cross-reference names, addresses, and sometimes even wallet addresses (if publicly associated with sanctioned entities) against relevant sanctions databases.

**Reporting:** Any positive match must result in an immediate freeze of assets and a Suspicious Transaction Report (STR) or Suspicious Activity Report (SAR) to the FIA.

**UN Sanctioned Jurisdictions:** Transactions with individuals, entities, or in some cases, entire sectors or regions within countries designated under UN sanctions (e.g., North Korea, Iran for certain activities) are prohibited or restricted.

**FATF High-Risk Jurisdictions:** While not outright prohibitions, the FIA and NBFIRA would expect VASPs to apply enhanced due diligence to transactions involving customers or jurisdictions identified by the FATF as high-risk (e.g., those on the FATF "black list" or "grey list"). This means increased scrutiny, robust record-keeping, and potentially refusing to onboard customers from such regions if risks cannot be sufficiently mitigated.

**Internal Risk Appetite:** Individual VASPs in Botswana may choose to impose their own geographic restrictions based on their internal risk assessments and compliance policies, opting to avoid certain jurisdictions deemed too risky, even if not directly sanctioned.

**Administrative Fines:** Significant monetary penalties can be imposed by NBFIRA and FIA for non-compliance with regulatory requirements, including failure to implement adequate AML/CFT controls or report suspicious transactions.

**Imprisonment:** Individuals (e.g., directors, compliance officers) can face terms of imprisonment for offenses such as money laundering, terrorist financing, or serious breaches of AML/CFT duties.

**Asset Forfeiture:** Proceeds of crime, including virtual assets involved in illicit activities or linked to sanctioned entities, are subject to freezing and forfeiture under PICA.

**License Revocation:** NBFIRA can suspend or revoke the license of a VASP that fails to comply with its legal and regulatory obligations, effectively preventing it from operating in Botswana.

**Reputational Damage:** Beyond legal penalties, non-compliance can severely damage a VASP's reputation and ability to attract customers or partners.

**The Consolidated United Nations Security Council Sanctions List:** This includes individuals and entities designated under various UN resolutions (e.g., Al-Qaida Sanctions Committee, ISIL (Da'esh) and Al-Qaida Sanctions Committee, 1988 Sanctions Committee (Taliban), DPRK, Iran, Libya, Mali, Somalia, South Sudan, Yemen, etc.).

**Link:** UN Security Council Sanctions List

**FATF Public Statements:** These identify jurisdictions with strategic deficiencies in their AML/CFT regimes.

**Link:** FATF High-Risk and other Monitored Jurisdictions

exchange between virtual assets and fiat currencies;

exchange between one or more forms of virtual assets;

safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets; and

participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.

Establish and maintain **policies, controls, and procedures** to ensure compliance with the Travel Rule.

**Collect and maintain** the required originator and beneficiary information for all virtual asset transfers.

**Transmit** this information to the beneficiary VASP, or make it available upon request to relevant authorities.

Ensure that their **systems and processes** are capable of accurately capturing, storing, and transmitting the required data in a secure manner.

Originator’s account number used to process the transaction (or unique transaction identifier)

Originator’s physical address or national identification number or customer identification number (i.e., not a publicly available identifier) or date and place of birth

Beneficiary’s account number used to process the transaction (or unique transaction identifier)

**Administrative Penalties:** Fines imposed by NBFIRA for breaches of regulatory requirements. These can be substantial and aim to deter non-compliance.

**Suspension or Revocation of License:** NBFIRA has the power to suspend or revoke the license of a VASP that fails to comply with its obligations, effectively preventing them from operating in Botswana.

**Criminal Penalties:** For serious breaches, especially those related to money laundering or terrorist financing, individuals and corporate officers can face:

**Imprisonment:** Terms of imprisonment for individuals found guilty of offenses under the AML/CFT framework.

Botswana’s current dedicated virtual‑asset legislation is the Virtual Assets Act, 2025 (Act No. 4 of 2025, S.I. 9 of 2025), which regulates the sale and trade of virtual assets and the licensing of virtual asset service providers and issuers of initial token offerings; the earlier citation to a “Virtual Assets Act, 2022 (Act No. 19 of 2022, published in the Botswana Government Gazette on 27th May 2022)” is no longer accurate as the operative Act is now the 2025 statute.

**Non-Bank Financial Institutions Regulatory Authority (NBFIRA)**

**Section 5:** Prohibits any person from carrying on a virtual asset business or virtual assets service without a license issued by NBFIRA.

**Section 3 (Definitions):** Defines a "virtual asset service provider" (VASP) to include any person who, as a business, "provides custody or administration of virtual assets or instruments enabling control over virtual assets."

**Sections 6-10:** Outline the application process for a license, including requirements such as:

Application in the prescribed form.

Provision of information on the applicant's business, management, financial resources, operational plan, internal controls, risk management systems, and compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) obligations.

NBFIRA assesses the applicant's "fit and proper" status, ensuring the applicant and its management have the necessary integrity, competence, and financial soundness.

Virtual Assets Act, 2022, Part III (Sections 5-13): Licensing of Virtual Assets Service Providers.

**Section 15:** Requires a licensed VASP to "at all times maintain adequate and appropriate systems of control and procedures for the proper administration of its affairs." This provision is broad enough to encompass requirements for client asset segregation to prevent co-mingling and protect client funds in case of VASP insolvency.

**Section 18:** Grants NBFIRA the power to issue directives and practice notes to VASPs concerning various matters, which would include detailed operational requirements like asset segregation.

**Section 15(1)(d):** Requires a VASP to "at all times maintain adequate financial resources for the proper performance of its functions." While not directly mandating insurance, adequate financial resources could implicitly cover potential liabilities.

**Section 18:** NBFIRA has the power to issue directives. It could, in the future, introduce requirements for professional indemnity insurance or specific bonding for VASPs handling client assets, especially given the risks associated with virtual assets.

**Section 15(1)(a):** Requires a licensed VASP to "implement appropriate measures to safeguard the virtual assets under its custody or control against theft, loss, or damage."

**Section 15(1)(b):** Requires a VASP to "implement a robust information technology framework to manage risks, including cybersecurity and operational resilience."

**Section 3 (Definitions):** A "virtual asset service provider" is any person who, as a business, performs one or more of several enumerated activities, including "custody or administration of virtual assets or instruments enabling control over virtual assets."

**NBFIRA Directives, Regulations, and Guidelines:** NBFIRA is mandated by the Act to develop and issue subsidiary legislation, directives, and guidelines to fully implement its provisions. These future instruments are expected to provide the granular detail for aspects like:

The Botswana Cybersecurity Bill, 2025, establishes specific, legally enforceable requirements for risk management in custody, including cybersecurity and disaster recovery, for financial services and critical infrastructure.

Detailed operational requirements (e.g., specific security measures for private keys, possibly including cold storage ratios).

Further clarification on client asset protection and segregation.

Specific capital adequacy or insurance requirements.

**Public Consultations:** NBFIRA is likely to engage in public consultations as it develops these detailed regulations, allowing industry stakeholders to provide input.

**Issuing warnings and advisories** to the public about the risks associated with cryptocurrencies and unregistered virtual asset service providers (VASPs).

Botswana enacted the Virtual Assets Act, 2025, which vests the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) with supervisory powers and requires VASPs to be licensed, representing a fully enacted framework rather than the still-implementing 2022 bill.

**Non-Bank Financial Institutions Regulatory Authority (NBFIRA):** This is the primary proposed regulator for Virtual Asset Service Providers (VASPs) under the upcoming Virtual Asset Bill. NBFIRA has been active in issuing public warnings.

**Bank of Botswana (BoB):** The central bank, which has generally maintained a cautious stance on cryptocurrencies, focusing on financial stability and consumer protection.

**Financial Intelligence Agency (FIA):** Responsible for AML/CFT supervision and analysis. The FIA often highlights the risks associated with virtual assets in its national risk assessments.

**Regulator Name:** Non-Bank Financial Institutions Regulatory Authority (NBFIRA)

**Entity Targeted:** General public and unregistered virtual asset service providers (VASPs)

**Violation Type:** Operating or engaging with unregistered virtual asset businesses, inherent risks of unregulated crypto activities (e.g., fraud, market volatility, money laundering).

**Penalty Amount:** Not applicable (these are warnings, not enforcement actions against specific entities).

**Date:** Multiple advisories have been issued over recent years. For example, a significant one was issued in **July 2021**.

**Outcome:** To educate the public about the risks of virtual assets and to caution against engaging with unregistered VASPs. It also served as a notice that a regulatory framework was being developed.

**NBFIRA Advisory on Virtual Assets and Virtual Asset Service Providers (July 2021):** https://www.nbfira.org.bw/news-media/media-releases/advisory-virtual-assets-and-virtual-asset-service-providers

*(While this specific advisory is from 2021, NBFIRA has maintained this stance and regularly reiterates similar warnings.)*

**Regulator Name:** Government of Botswana (led by the Ministry of Finance, with NBFIRA as the designated supervisor)

**Entity Targeted:** All entities and individuals involved in virtual asset activities in Botswana.

**Violation Type:** N/A (This is a legislative development, not an enforcement action).

**Date:** The Bill was gazetted in **2022** and is still undergoing the legislative and implementation process.

**Outcome:** To create a comprehensive legal framework for the regulation, supervision, and oversight of virtual assets and VASPs in Botswana, aligning with international standards (FATF recommendations). Once fully enacted and operational, this framework will enable NBFIRA to license, supervise, and *enforce* against non-compliant entities.

**Source URL (AFDB discussion of the Bill):**

**Botswana Virtual Asset Bill 2022: Assessment and Recommendations for Development:** https://www.afdb.org/en/documents/botswana-virtual-asset-bill-2022-assessment-and-recommendations-development

*(Note: Direct government gazette links for bills can be ephemeral or require specific legislative databases. The AFDB report provides excellent context and confirmation of the Bill's existence and purpose.)*