DeFi protocol frontend 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:

The BCD is the main prudential regulator for financial institutions and is responsible for supervising their adherence to AML/CFT requirements. It issues regulations and guidance for the financial sector.

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

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

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.

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.

Limited Crypto Adoption: The overall adoption and usage of cryptocurrencies in Djibouti are relatively low compared to more developed economies.

Regulatory Focus: The BCD's regulatory priorities may be focused on traditional financial sectors and broader financial stability, rather than active enforcement in an unregulated crypto space.

Lack of Public Reporting: Even if smaller, general financial crime investigations indirectly involved crypto, they are typically not publicly reported as "cryptocurrency enforcement actions" unless specific crypto regulations were violated.

Global Legal Insights - Blockchain & Cryptocurrency Regulation 2024 (Djibouti Chapter):

This resource often provides a good overview of the legal status of cryptocurrencies in various countries. For Djibouti, it typically indicates a lack of specific regulation.

Law Firm Analyses (e.g., DLA Piper, Baker McKenzie, etc. if they cover Africa):

Major law firms often publish summaries of crypto regulations across jurisdictions. Their analyses for Djibouti consistently highlight the absence of a specific framework.

Example of a general resource often citing lack of regulation in many African countries: Africa Blockchain Report (While not specific to Djibouti, it generally categorizes countries without specific laws.)

No specific custodial license for digital assets currently exists. Djibouti does not have a dedicated regulatory regime that requires entities providing crypto custody services to obtain a specific license.

Any entity wishing to operate in the financial sector would generally need to comply with the broader banking and financial services laws regulated by the Central Bank. However, these laws typically do not explicitly cover digital asset custody.

FATF Recommendations: These recommendations would encourage Djibouti to identify and regulate VASPs for AML/CFT purposes, including customer due diligence, record-keeping, and suspicious transaction reporting. However, this primarily addresses financial crime prevention and not the prudential or operational aspects of custody services.

Djibouti's AML/CFT Framework: Djibouti has an AML/CFT law (Law N° 100/AN/07/5ème L on Money Laundering and Terrorist Financing, as amended) and a National Financial Intelligence Processing Unit (CENTIF). While this framework exists, it typically focuses on transactional monitoring and reporting rather than detailed operational requirements for digital asset custody.