Remote VASP serving residents 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.

While it creates the framework, it generally defers to further decrees or existing AML/CFT laws for specific requirements.

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.

This regulation covers customer due diligence, suspicious transaction reporting, and record-keeping obligations for all regulated entities.

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

Identification and Verification:

Collecting and verifying the identity of customers (natural and legal persons) using reliable, independent source documents, data, or information. This includes full name, date of birth, nationality, physical address, and identification numbers (e.g., passport, national ID card).

For legal entities, this includes verifying the legal form, name, address, directors, and beneficial owners.

Understanding the Nature of Business: Understanding the purpose and intended nature of the business relationship.

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.

Source of Funds/Wealth: For high-risk clients or large transactions, inquiring about the source of funds or wealth.

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).

Reports must be made promptly when a VASP knows, suspects, or has reasonable grounds to suspect that funds are the proceeds of a criminal activity or are related to terrorist financing.

Tipping-off is strictly prohibited, meaning VASPs must not inform the customer or any third party that an STR has been filed.

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.

STRs: Copies of all suspicious transaction reports filed.

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.

Regulation No. 04/22/CM/UMAC/CM came into effect upon its publication on 21 December 2022.

The COBAC Instruction No. 001/GR/2023, providing implementation guidance, was effective from 31 January 2023.

While national transposition into CAR-specific law might still be ongoing or subject to internal processes, the regional directive and COBAC's instruction mandate compliance from VASPs operating in CAR as of these dates.

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

This threshold applies to both single transactions and linked transactions.

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.

The specific penalties are generally outlined in the national AML/CFT laws of CEMAC member states, as well as COBAC's supervisory powers.

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).

The Central African Republic faces downside financing risks related to BEAC and has previously shown practices challenging regional monetary policy uniformity, suggesting potential for financial instability risks. While robust Anti-Money Laundering and Combating the Financing of Terrorism (AML-CFT) legal frameworks were noted in 2006, the provided evidence does not directly confirm that BEAC specifically argued a CAR law violated CEMAC conventions concerning unified monetary policy.

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.

Date: Immediately following CAR's adoption of Bitcoin as legal tender in April 2022. BEAC issued strong statements and a warning circular in May 2022.

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.

Regulator Name: International Monetary Fund (IMF) – acting in an advisory and surveillance capacity, not a direct enforcement role but exerting significant policy pressure.

Violation Type: Concerns over governance issues, transparency, economic risks, financial stability, and potential for illicit finance associated with the Sango Coin project and the adoption of Bitcoin as legal tender. The IMF repeatedly warned that these initiatives could undermine economic stability and complicate aid efforts. Penalty Amount: No direct monetary penalty or fine. The "penalty" was the withholding of financial support, conditionalities on aid, and strong public statements that could deter foreign investment and lead to a lack of international financial sector integration.

Date: Multiple instances, particularly throughout 2022 and 2023, following the launch of Sango Coin and the Bitcoin law. For example, the IMF issued a staff report in July 2022 and continued to raise concerns.

Outcome: The Sango Coin project faced significant delays, lack of widespread adoption, and a de-facto scaling back of its ambitious initial vision. While CAR did not abandon its crypto plans, the IMF's warnings contributed to the project's difficulties in attracting investment and achieving its goals. The project appears largely dormant or significantly scaled back in 2024.