Remote VASP serving residents 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).

Identification and Verification:

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:

Politically Exposed Persons (PEPs).

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.

Libyan Financial Intelligence Unit (LFIU):

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.

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.

Evidence fact ly.aml.cbl-warnings-the-central-bank-of-libya not found (may have been renamed).

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

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.

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.

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.

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.