Crypto-funded debit card in Djibouti

Law No. 128/AN/18/8ème L of July 18, 2018, modifying and completing Law No. 136/AN/07/5ème L on Money Laundering, Terrorist Financing and Proliferation Financing.

Be subject to the same AML/CFT obligations as traditional financial institutions. This means adhering to the principles outlined in Law No. 128/AN/18/8ème L.

Implement a risk-based approach to identify, assess, and mitigate money laundering and terrorist financing risks associated with their virtual asset products, services, customers, and delivery channels.

Comply with the FATF Travel Rule, which requires VASPs to obtain and transmit originator and beneficiary information for virtual asset transfers above a certain threshold.

Identifying and Verifying the Identity of the Customer:

For individuals: Obtaining name, address, date of birth, nationality, and a unique identification number (e.g., national ID card, passport). Verification typically requires official, independent documents.

For legal entities (companies, trusts, foundations): Obtaining legal name, legal form, proof of existence, powers that regulate the entity and bind it, address of registered office, and names of individuals who are authorized to act on behalf of the entity. Verification requires official registration documents.

Identifying and Verifying the Ultimate Beneficial Owner (UBO): Taking reasonable measures to understand the ownership and control structure of the customer and identify the natural persons who ultimately own or control the customer. This often applies for entities where control is 25% or more.

Understanding the Purpose and Intended Nature of the Business Relationship: Collecting information about the customer's anticipated activity, source of funds, and source of wealth (especially for high-risk customers or large transactions).

Ongoing Monitoring: Continuously monitoring the business relationship and transactions undertaken by the customer to ensure they are consistent with the VASP's knowledge of the customer, their business, and risk profile.

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

Politically Exposed Persons (PEPs)

Customers from high-risk jurisdictions (as identified by FATF or national authorities)

Complex, unusually large, or unusual transaction patterns

Customers involved in new technologies or products that favor anonymity.

Simplified Due Diligence (SDD): Permitted for lower-risk scenarios, as defined by the VASP's risk assessment and regulator's guidance.

Report any suspicious transaction (including attempted transactions) where they know, suspect, or have reasonable grounds to suspect that funds are the proceeds of a criminal activity or are related to terrorist financing.

Submit STRs promptly to the Financial Intelligence Unit (FIU).

Refrain from "tipping off" the customer or any third party that an STR has been filed.

Identity records: All records obtained through CDD procedures (copies of identification documents, account files, business correspondence) for at least five (5) years after the business relationship is terminated.

Transaction records: Records of transactions, including the amounts, currencies, and names/addresses of participants, for at least five (5) years from the date of the transaction.

STRs and related internal documentation: Must also be kept for a similar period.

Banque Centrale de Djibouti (BCD) - The Central Bank of Djibouti:

Cellule de Traitement des Renseignements Financiers (CTRF) - The Financial Intelligence Unit (FIU):

No Explicit Classification: Djibouti has not publicly issued specific legislation classifying stablecoins as e-money, payment tokens, or securities.

Likely Implied Classification (if regulated):

E-money/Payment Tokens: If a stablecoin were widely adopted for payments and fiat-backed (1:1), the BCD might choose to regulate it under any existing (or future) electronic money or payment services laws, if such laws exist and are broad enough to encompass digital assets. However, specific e-money regulations for digital currencies are not publicly available.

Securities: If a stablecoin's design (e.g., promising returns, complex reserve management, algorithmic nature) were deemed to confer investment-like rights or expectations, it could potentially be viewed as a security under general corporate or investment laws, if such a framework were applied. This would be decided on a case-by-case basis by authorities.

No Specific Requirements: There are no specific reserve requirements for stablecoins in Djibouti.

Implied Requirements (if classified as e-money): If a stablecoin were to be classified and regulated as e-money, general principles of e-money regulation (which often mandate full backing by fiat in segregated accounts with regulated financial institutions) would likely apply. However, without such classification, no specific rules exist.

No Specific Licensing: Djibouti does not have a specific licensing regime for stablecoin issuers.

Implied Licensing (if regulated):

Financial Institutions: If a stablecoin activity were deemed to constitute banking, electronic payment services, or other regulated financial services, the issuer would likely need to obtain a license from the Banque Centrale de Djibouti (BCD) under existing banking or financial services laws.

General Business Registration: At a minimum, any entity operating in Djibouti would need to comply with general business registration and corporate laws.

No Specific Rights: There are no specific regulatory provisions in Djibouti governing redemption rights for stablecoin holders.

Contractual Basis: Redemption rights would primarily be governed by the terms and conditions set by the stablecoin issuer and general contract law. Without specific regulation, there would be no explicit regulatory guarantee of redemption at par.

Individuals: Djibouti generally does not impose a capital gains tax on individuals for the sale of movable assets (such as shares, bonds, or, by extension, cryptocurrencies) unless it constitutes a professional trading activity. If an individual makes a profit from selling cryptocurrency, it is highly likely that these gains would not be subject to capital gains tax.

Businesses: For businesses (companies or sole proprietorships) where the acquisition and sale of cryptocurrencies are part of their commercial activity, any profits derived from such sales would be considered part of their ordinary business income and would be subject to the corporate income tax (Impôt sur les Bénéfices Industriels et Commerciaux - IBIC). The IBIC rate is generally around 25%.

Absence of Specific Laws: As of my last update, Djibouti lacks a dedicated legal and regulatory framework for cryptocurrencies. This means there are no specific crypto laws to enforce.

Regulatory Stance: The BCD has generally focused on issuing warnings about the risks associated with unregulated financial activities, but these are broad advisories rather than specific enforcement actions against crypto firms or individuals.

Regulator: The primary financial regulator in Djibouti is the Banque Centrale de Djibouti (BCD) (Central Bank of Djibouti).