DeFi protocol frontend in Liberia

Compliance Requirement for VASPs: VASPs must screen all their customers and transactions against the UN Consolidated Sanctions List (e.g., ISIL (Da'esh) & Al-Qaida Sanctions List, DPRK Sanctions List, etc.) to identify any sanctioned parties or activities.

U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) Sanctions: While OFAC sanctions are primarily U.S. law, their extraterritorial reach (especially through the U.S. financial system) means that any VASP or financial institution anywhere in the world that engages in transactions involving a U.S. person, U.S. dollar, or U.S. technology must comply. Non-compliance can lead to severe penalties and loss of access to the U.S. financial system.

VASP Compliance Requirements:

European Union (EU) Sanctions: EU sanctions are binding on persons and entities within EU jurisdiction, but like OFAC, they have a significant global impact due to the EU's economic power.

Financial Intelligence Unit of Liberia (FIUL) Act: This act establishes the FIUL as the central agency for receiving, analyzing, and disseminating suspicious transaction reports (STRs) and other financial intelligence.

No specific rules exist for the segregation of client digital assets. In traditional finance, robust segregation rules protect client funds from institutional insolvency. Without a specific framework for digital assets, such rules are absent.

No specific custodial license for digital assets currently exists. Any entity in Liberia offering digital asset custody services would likely operate in a regulatory gray area or might be indirectly subject to general financial services licensing if its activities are deemed to fall under existing financial institution definitions (e.g., as a payment service provider or financial intermediary), but this would not be crypto-specific.

Like many countries, Liberia is likely under pressure from international bodies like the Financial Action Task Force (FATF) to develop an anti-money laundering (AML) and counter-terrorism financing (CTF) framework that covers virtual assets. Any future legislation might first focus on AML/CTF obligations for Virtual Asset Service Providers (VASPs), which could indirectly touch upon custody providers as a type of VASP.

URL: Information on Liberia's AML/CTF framework is typically found on the CBL or Ministry of Justice websites, or reports from the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA).