Libya

**Law No. 1 of 2021 on Anti-Money Laundering and Combating the Financing of Terrorism** (Amending and replacing earlier laws like Law No. 2 of 2005).

This law establishes the general framework for combating money laundering and terrorist financing, defining predicate offenses, specifying obligations for financial institutions and designated non-financial businesses and professions (DNFBPs), and outlining penalties. While it does not specifically mention "virtual assets" or "VASPs," its general provisions on financial transactions and illicit funds would apply to any entity processing value.

**For Individuals:** Obtaining and verifying name, permanent address, date of birth, nationality, and official identification documents (e.g., national ID, passport).

**For Legal Entities/Arrangements:** Obtaining and verifying name, legal form, proof of existence, powers that regulate and bind the entity, and the names of relevant persons having a senior management position.

**Beneficial Ownership:** Identifying and verifying the ultimate beneficial owner (UBO) of customers who are legal entities or arrangements, typically individuals who own or control 25% or more of the entity's shares or voting rights, or otherwise exercise control through other means.

**Purpose and Nature of Business Relationship:** Understanding the purpose and intended nature of the business relationship or occasional transaction.

**Ongoing Monitoring:** Conducting ongoing due diligence on the business relationship and scrutiny of transactions undertaken throughout the course of that relationship, to ensure that the transactions are consistent with the obliged entity’s knowledge of the customer, their business, and risk profile.

**Risk-Based Approach:** Applying CDD measures based on a risk assessment of the customer, business relationship, or transaction. Enhanced Due Diligence (EDD) would be required for higher-risk situations, such as:

Customers from or in high-risk jurisdictions.

Complex, unusually large transactions, or unusual patterns of transactions that have no apparent economic or visible lawful purpose.

Transactions involving new technologies or products that favor anonymity.

VASPs, if regulated, would be obliged to report any suspicious transactions to the Financial Intelligence Unit (FIU).

**Reporting Obligation:** Any transaction, attempted transaction, or activity that raises suspicions of money laundering or terrorist financing must be reported promptly.

**No Tipping-Off:** Prohibitions on "tipping off" the customer or any third party that an STR has been made or that a money laundering/terrorist financing investigation is underway.

**Internal Controls:** Implementation of internal policies, procedures, and controls for identifying and reporting suspicious activities.

**Customer Due Diligence Records:** All documents and information obtained during the CDD process (identification documents, beneficial ownership information).

**Transaction Records:** Records of all transactions, including amounts, currencies, dates, and parties involved. This would be particularly critical for virtual asset transactions, including blockchain addresses.

**STRs:** Copies of all suspicious transaction reports submitted.

**Account Files and Business Correspondence:** Relevant documentation related to customer accounts and business relationships.

**Central Bank of Libya (CBL):**

**Role:** The primary regulatory and supervisory authority for financial institutions in Libya. If VASPs were legalized, the CBL would likely be responsible for their licensing, supervision, and enforcement of AML/CFT compliance.

**Website:** http://www.cbl.gov.ly/ (Note: Accessibility and content may vary due to the political situation.)

**Libyan Financial Intelligence Unit (LFIU):**

**Role:** The national center for receiving, analyzing, and disseminating suspicious transaction reports (STRs) to relevant law enforcement agencies.

**No Equivalent Test:** Libya does **not** have a specific legal test akin to the Howey test for determining whether a digital asset constitutes a "security." The regulatory focus is not on differentiating token types (utility vs. security), but on the inherent risks associated with all cryptocurrencies themselves.

**Basis for Restriction:** The CBL's pronouncements are based on concerns about:

Absence of regulatory oversight and legal framework.

High volatility and speculative nature.

Potential for fraud and consumer protection issues.

Facilitation of money laundering and terrorism financing due to perceived anonymity and cross-border nature.

Threats to financial stability and monetary sovereignty.

**All cryptocurrencies are treated with suspicion:** Given the overarching restrictive stance, the concept of differentiating between utility tokens, security tokens, or other categories as distinct "securities" does not apply in Libya's current regulatory framework.

**General Prohibition:** All virtual currencies are generally subject to the same prohibitory or highly restrictive guidance issued by the CBL. The CBL does not distinguish based on the underlying nature or rights conferred by the token; rather, it focuses on the medium of exchange itself being unregulated and risky.

**None Exist:** There are no established registration or exemption requirements for token issuers in Libya. This is primarily because the issuance or facilitation of trading such tokens is not a recognized or permitted activity under current regulations. The CBL's guidance effectively makes it unfeasible or illegal for entities to operate in this space.

**Lack of Legal Basis:** Without a legal framework that recognizes and regulates crypto assets, there is no mechanism for issuers to seek registration or exemptions.

**No Specific Rules:** Similarly, there are no specific rules governing the secondary trading of cryptocurrency tokens. Any attempt to engage in such trading would fall under the general prohibitions or warnings issued by the CBL regarding cryptocurrency transactions.

**Unregulated and Discouraged:** The CBL has consistently warned against engaging in any form of dealing, exchanging, or trading of virtual currencies.

**CBL Warnings:** The Central Bank of Libya has consistently issued strong warnings to financial institutions and the public against dealing with virtual currencies. These warnings constitute the primary enforcement mechanism, deterring widespread adoption and use.

**AML/CFT Prosecution:** Any use of cryptocurrencies in illicit activities (e.g., money laundering, financing terrorism, fraud) would fall under Libya's existing Anti-Money Laundering and Combating the Financing of Terrorism laws. While these laws are not crypto-specific for *securities classification*, they provide a legal basis for prosecuting individuals involved in illicit financial activities, regardless of the asset used.

**Central Bank of Libya (CBL) Circular No. 2 of 2018:**

**Content:** This is the most significant directive. It explicitly warned against dealing in virtual currencies due to the absence of a regulatory framework, high risks, and potential for fraud, money laundering, and terrorism financing. It effectively banned commercial banks and other financial institutions from processing transactions related to cryptocurrencies.

**URL:** Official CBL circulars are often published in Arabic and may not have readily available direct English links on their international website. However, reports from reputable financial news outlets and international bodies frequently reference this circular.

*While a direct English URL on the CBL website might be hard to find, its existence and content are widely reported.* You would typically find references to this circular in reports by the FATF, IMF, and other international financial bodies when discussing Libya's AML/CFT framework.

An example of where its content is frequently cited: IMF Country Report No. 20/220 Libya: Request for Emergency Financing Under the Rapid Financing Instrument (page 13, section 26-27 discusses CBL's position on virtual assets).

**Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Law:**

**Example:** Libya has updated its AML/CFT laws, for instance, Law No. 1 of 2021. While not specific to crypto *as securities*, these laws provide the legal framework for combating illicit financial activities, which would encompass any illicit use of cryptocurrencies.

**URL:** Full official texts of Libyan laws can be challenging to find in English directly from government portals. International bodies like the Financial Action Task Force (FATF) often review and reference these laws.

**UNSCR 1970 (2011):** Imposed an arms embargo, travel ban, and asset freeze on specific individuals and entities.

**UNSCR 1973 (2011):** Expanded the asset freeze and travel ban.

**UNSCR 2009 (2011), 2174 (2014), 2213 (2015), 2278 (2016), 2362 (2017), 2652 (2022):** Extended and modified the sanctions regime, including measures related to illicit oil exports, human trafficking, and human rights abuses.

**Crypto Relevance:** The "asset freeze" provisions in these resolutions cover *all* funds, other financial assets, and economic resources, which are interpreted to include virtual assets like cryptocurrencies. Any individual or entity designated under the UN Libya sanctions is prohibited from accessing or transacting with their assets, including crypto.

**Sanctioned Entity Screening:** VASPs must screen all their customers (KYC) and transaction counterparties against the **UNSC Consolidated List** related to Libya.

**Asset Freezing:** If a VASP identifies a match, it must immediately freeze any crypto assets belonging to or controlled by the designated person/entity and report it to the relevant national authorities.

**Prohibition on Funds/Economic Resources:** VASPs are prohibited from making crypto assets or economic resources available, directly or indirectly, to or for the benefit of listed individuals/entities.

UNSC Resolution 1970 (2011): https://undocs.org/S/RES/1970(2011))

UNSC Resolution 2213 (2015): https://undocs.org/S/RES/2213(2015))

UN Libya Sanctions Committee: https://www.un.org/securitycouncil/sanctions/1970

**Council Decision (CFSP) 2015/1333:** Concerning restrictive measures in view of the situation in Libya.

**Council Regulation (EU) 2016/44:** Concerning restrictive measures in view of the situation in Libya and repealing Regulation (EU) No 204/2011.

**Crypto Relevance:** EU asset freezing measures are broadly worded to cover all funds and economic resources, which includes cryptocurrencies. Transfers or provision of crypto assets to designated persons/entities, or for their benefit, are prohibited. The EU has explicitly clarified that crypto assets fall under "funds" and "economic resources" in its sanctions regimes, notably with respect to Russia, which sets a precedent for other regimes.

**Sanctioned Entity Screening:** VASPs operating in the EU or with EU nexus must screen customers and transactions against the **EU Sanctions Map** and official lists, which include UN-designated individuals/entities and any additional autonomous EU designations.

**EU Sanctions Map (Libya):** https://www.sanctionsmap.eu/#/main/sanctions/149 (select Libya)

**Asset Freezing & Prohibition:** Immediate freezing of crypto assets and prohibition on making crypto available to listed persons.

**Reporting:** Reporting of frozen assets and suspected breaches to national competent authorities.

Council Regulation (EU) 2016/44 (latest consolidated version): https://eur-lex.europa.eu/eli/reg/2016/44/2023-09-11

EU Sanctions Policy (General Info): https://www.consilium.europa.eu/en/policies/sanctions/

**Executive Order (E.O.) 13566 (2011):** Blocking Property of Certain Persons With Respect to Libya.

**E.O. 13726 (2016):** Blocking Property and Suspending Entry of Persons Contributing to the Situation in Libya.

**Crypto Relevance:** OFAC defines "property" and "property interests" broadly to include any asset whatsoever. While not explicitly naming "cryptocurrency" in earlier E.O.s, OFAC has repeatedly clarified that virtual currency is considered "property" for sanctions purposes. Therefore, U.S. persons and entities subject to OFAC jurisdiction are prohibited from engaging in transactions, including those involving cryptocurrencies, with individuals or entities on the **Specially Designated Nationals and Blocked Persons (SDN) List** or other OFAC sanctions lists related to Libya. All property and interests in property of designated persons are blocked.

**Jurisdictional Reach:** Applies to U.S. persons globally (citizens, residents, entities incorporated in the U.S. or subject to U.S. jurisdiction), and to non-U.S. persons who cause a U.S. person to violate sanctions, or who involve U.S. financial systems.

**OFAC Sanctions List Search:** https://sanctionssearch.ofac.treas.gov/

**OFAC Libya Sanctions Page:** https://ofac.treasury.gov/sanctions-programs/country-specific-sanctions-programs/libya-sanctions-program

**Blocking & Reporting:** Block (freeze) any crypto assets of designated persons and report such blockings to OFAC within 10 business days. Reject (and report) prohibited transactions not subject to blocking.

**Prohibition on Facilitation:** Prohibited from facilitating transactions for sanctioned parties, even if the VASP itself is not a U.S. person, if the transaction has a U.S. nexus.

Implement robust Sanctions Screening solutions for all customers (KYC) and transaction counterparties.

Screen against the UN Consolidated List, EU Sanctions Map, OFAC SDN List, and any other relevant national lists.

Perform ongoing screening as lists are updated frequently.

While there isn't a blanket ban on all crypto transactions *in Libya*, transactions involving *sanctioned individuals/entities* or *prohibited activities* within Libya are forbidden.

VASPs should implement enhanced due diligence (EDD) for transactions originating from, destined for, or otherwise involving Libya, given the high-risk nature of the jurisdiction.

Be especially wary of transactions that could facilitate illicit arms sales, human trafficking, illicit oil exports, or support armed groups.

**Prohibited Activities:** Ensure transactions do not:

Directly or indirectly provide support to designated individuals/entities.

Involve the sale or transfer of arms or related materiel.

Support violations of human rights or human trafficking.

Facilitate illicit exports of crude oil or refined petroleum products.

Report any identified matches, frozen assets, or suspected sanctions violations to the relevant national competent authorities (e.g., financial intelligence units, OFAC for U.S. persons).

Submit Suspicious Activity Reports (SARs) or Suspicious Transaction Reports (STRs) as required by AML/CTF regulations.

Develop and implement a comprehensive sanctions compliance program specific to virtual assets.

Provide regular training to staff on sanctions risks, screening procedures, and reporting obligations.

Maintain detailed records of all compliance efforts.

**UN Sanctions:** Member states are obliged to implement UN sanctions into their national law, and penalties are determined by national legislation.

**EU Sanctions:** Penalties are determined by individual EU member states, but typically involve significant fines (often millions of Euros) and imprisonment (several years) for serious breaches.

**Civil Penalties:** Can range from thousands to millions of dollars per violation, depending on the program, severity, and voluntary disclosure.

**Criminal Penalties:** For willful violations, fines can reach millions of dollars and imprisonment terms can be up to 20 years.

**Reputational Damage:** Significant negative publicity and loss of trust.

**Legal Reference (OFAC Enforcement):** https://ofac.treasury.gov/sanctions-programs-and-country-information/enforcement-information

**Limited Transparency:** Enforcement actions, especially in financial crime or emerging tech, might not be widely publicized or documented in English-language media.

**Focus on Other Crimes:** Law enforcement may prioritize other forms of financial crime or security threats.

**Technical Capacity:** Regulators and law enforcement might lack the specialized technical capacity to track, investigate, and prosecute complex cryptocurrency-related offenses effectively.

**Regulator Name:** Central Bank of Libya (CBL)

**Entity Targeted:** All individuals and financial institutions within Libya (general ban, not a specific entity).

**Violation Type:** Dealing in, trading, or possessing cryptocurrencies.

**Penalty Amount:** Not applicable to the ban itself, but potential penalties under Libyan law for illegal financial activities could include fines and imprisonment.

**Date:** The initial ban was issued in **2018**, and it has been reaffirmed multiple times since. There is no indication it has been lifted in the last three years.

**Outcome:** Cryptocurrencies remain illegal in Libya.

**Report mentioning the 2018 ban and the CBL's stance:**

Middle East Monitor - Libya's Central Bank bans dealing in cryptocurrency (Dated 2018, but establishes the foundational ban which remains active.)

Global Legal Insights - Libya Banking Regulation 2023 (General overview of banking regulation, often indirectly mentioning or implying the continued ban by not listing crypto as regulated.)

Central Bank of Libya official statements (Arabic) would be the definitive source, but specific English-language press releases on continued enforcement or reaffirmation are rare. Statements in Arabic from 2018 banning crypto are widely reported by news agencies.)