DeFi protocol frontend in Central African Republic

Law No. 22.006 of April 27, 2022, on the Regulation of Cryptocurrencies in the Central African Republic:

The 2022 law initially made Bitcoin legal tender in Central African Republic, but was later amended to revoke Bitcoin's legal tender status, while subsequent legislation enabled tokenization of land and natural resources.

Central African Republic has not established functional licensing or supervision of VASPs; rather, it has embraced opaque, unregulated cryptocurrency schemes that risk state asset capture by criminal organizations, with no effective AML/CFT compliance or VASP oversight.

BEAC Regulation No. 01/17/CEMAC/UMAC/CM of March 30, 2017, on the Prevention and Suppression of Money Laundering and Terrorist Financing in the CEMAC Zone:

As a member of the Economic and Monetary Community of Central Africa (CEMAC), CAR is bound by regional regulations issued by the Banque des États de l'Afrique Centrale (BEAC).

This regulation provides the comprehensive AML/CFT framework for financial institutions within the CEMAC zone. While it predates the explicit regulation of VASPs, the CAR's 2022 crypto law implies that VASPs should adhere to the same stringent AML/CFT requirements as traditional financial institutions, as per FATF Recommendation 15.

Law No. 00-010 of May 8, 2000, on Money Laundering and Terrorist Financing:

Identification and Verification:

Ultimate Beneficial Ownership (UBO): Identifying and taking reasonable measures to verify the identity of the beneficial owner(s) of customers, especially for legal persons and arrangements.

Ongoing Monitoring: Continuously 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, and risk profile.

Enhanced Due Diligence (EDD): Applying enhanced measures for higher-risk categories, such as politically exposed persons (PEPs), cross-border correspondent relationships, or transactions involving high-risk jurisdictions or products.

Obligation to Report: VASPs are obligated to report any suspicious transactions, regardless of the amount involved, to the national Financial Intelligence Unit (FIU).

Reporting Body: The national FIU in the Central African Republic is the Cellule Nationale de Traitement des Informations Financières (CENTIF).

CDD Information: All documents and information obtained during the CDD process (identification documents, verification records).

Transaction Records: Records of all transactions, including sender and recipient information, amounts, dates, and types of virtual assets involved.

Regulation No. 04/22/CM/UMAC/CM of 21 December 2022 concerning the regulation of Virtual Asset Service Providers (VASPs) in the CEMAC zone.

This regulation is further complemented by an instructional circular from the Banking Commission of Central Africa (COBAC), which is the primary supervisor for financial institutions in CEMAC:

Instruction No. 001/GR/2023 of 31 January 2023 from COBAC on the practical implementation of certain provisions of Regulation No. 04/22/CM/UMAC/CM.

Exceeds EUR 1,000 (or its equivalent in XAF or other currency) for transactions conducted by VASPs.

Exchange between virtual assets and fiat currencies.

Exchange between one or more forms of virtual assets.

Transfer of virtual assets.

Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets.

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

Collect and retain the following information for transactions above the threshold:

Originator Information: Name, physical address, national identity number (or customer identification number), date and place of birth, and virtual asset wallet address (or unique transaction identifier).

Beneficiary Information: Name, physical address, virtual asset wallet address (or unique transaction identifier).

Transmit this information to the beneficiary VASP, where applicable, immediately and securely.

Maintain records of all collected information for at least five (5) years.

Implement risk-based procedures to identify and verify the identity of customers, especially for higher-risk transactions or relationships.

Administrative sanctions: Fines, injunctions, public reprimands.

Withdrawal or suspension of operating licenses for VASPs.

Referral to national judicial authorities for criminal prosecution under national AML/CFT laws, which can lead to imprisonment and substantial monetary fines for individuals and legal entities.

Regulator Name: Bank of Central African States (BEAC), the regional central bank for the six-nation Economic and Monetary Community of Central Africa (CEMAC), which includes CAR.

Entity Targeted: The Government of the Central African Republic (specifically its law adopting Bitcoin as legal tender).

Penalty Amount: No direct monetary penalty. The "penalty" was intense regulatory pressure, a demand for the law's repeal, and warnings to financial institutions within the CEMAC zone regarding engagement with cryptocurrencies. It represented significant political and economic pressure on CAR.

Outcome: CAR did not repeal its Bitcoin legal tender law, leading to a standoff with BEAC. However, the practical implementation of Bitcoin as legal tender has been largely ineffective, partly due to the lack of infrastructure and the regulatory friction with BEAC. BEAC continued to advise against the use of cryptocurrencies in the CEMAC zone.