DeFi protocol frontend in 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).

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.

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.

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

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.

Outcome: Cryptocurrencies remain illegal in Libya.

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.

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.

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

Libyan Financial Intelligence Unit (LFIU):

Identification and Verification:

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.

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.

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.

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.

Regulator Name: Central Bank of Libya (CBL)