Madagascar

Such activities are currently unrestricted but carry significant legal and operational risks due to the absence of specific protections or guidelines.

Such activities may be implicitly restricted or discouraged under broader financial regulations, or even face outright prohibitions from the Central Bank.

**No Specific Crypto Licensing Regime:** There is no specific law or regulation mandating licenses for cryptocurrency exchanges, custody providers, or virtual asset payment processors in Madagascar, unlike jurisdictions that have implemented frameworks like MiCA (EU), MAS (Singapore), or VARA (Dubai).

**Central Bank Caution/Warnings:** The Banque Centrale de Madagascar (BCM) – the country's central bank and primary financial regulator – has historically maintained a cautious, if not prohibitive, stance towards cryptocurrencies. They have likely issued public warnings about the risks associated with virtual assets, including price volatility, lack of consumer protection, and potential for illicit finance. These warnings often imply that crypto is not recognized as legal tender and regulated financial institutions should not facilitate their use.

**AML/CFT Implications:** While there are no crypto-specific AML/CFT regulations, Madagascar, as a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) and subject to FATF recommendations, has general anti-money laundering and combating the financing of terrorism (AML/CFT) laws. The Cellule de Renseignement Financier (CRF) is Madagascar's Financial Intelligence Unit.

In the absence of specific VASP regulations, these general AML/CFT laws *could* be interpreted to apply to entities dealing with virtual assets, especially if they interact with the traditional financial system. However, without specific guidance, the application remains ambiguous.

FATF Recommendation 15 specifically calls for countries to regulate and supervise VASPs for AML/CFT purposes. Madagascar is expected to implement these recommendations, which could lead to future regulations.

**Registration vs. Licensing Regime:** Currently, neither a dedicated registration nor a licensing regime for VASPs exists in Madagascar.

**Exchanges (Fiat-to-Crypto/Crypto-to-Crypto):** There are no specific licenses required. However, if an exchange facilitates fiat currency transactions (e.g., MGA deposits/withdrawals), it might inadvertently touch upon existing payment services regulations overseen by the BCM, potentially requiring a payment service provider license *for the fiat portion* of its operations.

**Custody Providers:** No specific licenses are required for virtual asset custody.

**Payment Processors (Virtual Assets):** No specific licenses are required for processing payments *in virtual assets*. Similar to exchanges, if these services involve conversion to or from fiat currency, they may fall under existing electronic payment service regulations.

**Capital Requirements:** Sufficient capital to cover operational risks, ensure solvency, and protect customer assets (amounts would vary based on the scope of services).

**AML/KYC Compliance:** Robust Anti-Money Laundering (AML) and Know Your Customer (KYC) policies and procedures, including transaction monitoring, suspicious activity reporting, and customer due diligence, in line with FATF recommendations.

**Local Presence:** Typically, a locally incorporated entity (e.g., a company registered in Madagascar) with a physical presence and local management.

**Governance and Management:** Fit and proper tests for directors and senior management, demonstrating competence, integrity, and sound governance.

**Technology and Security:** Adequate IT infrastructure, cybersecurity measures, and data protection protocols to safeguard customer data and assets.

**Consumer Protection:** Measures to protect consumers, including clear terms of service, dispute resolution mechanisms, and transparent fee structures.

**Banque Centrale de Madagascar (BCM):**

**Role:** The primary financial regulator responsible for monetary policy, banking supervision, and payment systems. Any future crypto regulation is likely to originate from or be overseen by the BCM.

*Note:* You would need to navigate their site for official press releases, financial circulars, or any statements regarding digital currencies. Information is predominantly in French and Malagasy.

**Cellule de Renseignement Financier (CRF):**

**Role:** Madagascar's Financial Intelligence Unit, responsible for combating money laundering and terrorist financing. They would be crucial in developing and enforcing AML/CFT aspects of any future VASP regulation.

*Note:* Their site contains information on Madagascar's AML/CFT framework, which would be the general legal basis for any future VASP-specific AML requirements.

**High Regulatory Risk:** Operating a cryptocurrency business in Madagascar currently carries significant regulatory risk due to the absence of clear rules. This can lead to uncertainty regarding legality, potential for sudden regulatory changes, or difficulties in interacting with traditional financial institutions.

**Evolving Landscape:** The global regulatory landscape for virtual assets is rapidly evolving. Madagascar, like other countries, is under pressure from international bodies (like FATF) to address VASP regulation. This situation could change at any time with the introduction of new laws or decrees.

**Legal Advice is Crucial:** It is **highly recommended** that any entity considering operating a virtual asset business in Madagascar seek specific legal advice from a local Madagascan law firm specializing in financial law. They can provide the most up-to-date interpretation of existing laws and advise on potential risks and compliance obligations, especially concerning general business law, tax, and potential indirect application of financial regulations.

**Legal Tender Status:** Cryptocurrencies are **not recognized as legal tender** in Madagascar.

**Banque Centrale de Madagascar (BCM - Central Bank of Madagascar)**

**Role:** The BCM is responsible for monetary policy, financial stability, and the regulation of banking and payment systems. It has taken the lead in issuing warnings due to the potential risks crypto poses to financial stability, consumer protection, and anti-money laundering efforts.

**Autorité des Marchés Financiers de Madagascar (AMF - Financial Markets Authority of Madagascar)**

**Role:** Regulates financial markets, securities, and investment services. Could potentially become involved if virtual assets were to be classified as securities.

**Avertissement de la Banque Centrale de Madagascar concernant les opérations effectuées en crypto-monnaies (Warning from the Central Bank of Madagascar regarding operations carried out in crypto-currencies)**

**Content:** This official communiqué warns the public about the risks associated with using, holding, or investing in cryptocurrencies. Key points include:

Cryptocurrencies are not recognized as legal tender.

They are not regulated by any Madagascan financial authority.

Users are exposed to high risks of fraud, cybercrime, money laundering, and terrorist financing.

There is no legal protection or recourse for users in case of loss or fraudulent activities.

The BCM strongly advises against engaging in cryptocurrency operations.

**Reference (URL):** The communiqué is usually found in the "Avertissements aux publics" section of the BCM website. While direct PDF links can change, here's where to look:

http://www.banque-centrale.mg/index.php/avertissements-aux-publics (Navigate to the warnings issued around December 2021).

**Trading:** Crypto trading by individuals is **strongly discouraged and undertaken at one's own risk.** The BCM's warning highlights that there is no legal protection or recourse for traders. While not explicitly illegal in a legislative sense (e.g., you won't be arrested for holding crypto), engaging in it is done outside any recognized or regulated financial system, making it high-risk.

**Exchanges:** There is **no licensing or regulatory framework for cryptocurrency exchanges** to operate in Madagascar. As such, any entity operating a crypto exchange would be doing so outside the regulated financial system. The BCM's warning extends to the use of such platforms, emphasizing the lack of oversight and consumer protection.

**Loi n° 2018-043 du 19 décembre 2018 relative à la lutte contre le blanchiment de capitaux et le financement du terrorisme (Law No. 2018-043 of December 19, 2018, on the Fight against Money Laundering and the Financing of Terrorism).**

This law is the cornerstone of Madagascar's AML/CFT framework. It defines the obligations of reporting entities, establishes the powers of the Financial Intelligence Unit (FIU), and outlines the criminalization of money laundering and terrorist financing.

While it may not explicitly name "Virtual Asset Service Providers," the broad definitions within such laws typically encompass entities that facilitate financial transfers, exchanges, or safekeeping of value, which can include virtual assets. VASPs are often implicitly or explicitly considered reporting entities under the "other financial institutions" or "designated non-financial businesses and professions" categories, especially regarding FATF Recommendation 15.

**For individuals:** Obtain and verify identity using reliable independent source documents (e.g., national ID card, passport), including full name, date of birth, address, and nationality.

**For legal persons/arrangements:** Obtain and verify legal name, legal form, proof of existence, powers that bind the legal person, and the identity of persons holding senior management positions.

**Beneficial Ownership:** Identify and verify the natural person(s) who ultimately own or control the customer, or the natural person(s) on whose behalf a transaction is being conducted.

**Purpose and Intended Nature of Business Relationship:** Understand the rationale behind the customer's transactions and the nature of their relationship with the VASP.

**Ongoing Monitoring:** Conduct 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 VASP's knowledge of the customer, their business and risk profile, including, where necessary, the source of funds.

**Risk-Based Approach:** Apply CDD measures on a risk-sensitive basis:

**Simplified CDD:** May be applied where the risks of money laundering or terrorist financing are identified as low.

**Enhanced CDD (EDD):** Required for higher-risk situations, such as:

Politically Exposed Persons (PEPs), their family members, and close associates.

Complex or unusually large transactions.

Transactions involving new technologies or anonymous transactions where the risks are deemed higher.

Source of funds and source of wealth verification may be required for EDD.

**Obligation to Report:** VASPs, as reporting entities, are legally obligated to report any suspicious transactions or activities to the Financial Intelligence Unit (FIU), regardless of the amount involved. This includes transactions that are unusual, lack clear economic rationale, or appear to be connected to money laundering or terrorist financing.

**Timeliness:** Reports must be made promptly, usually within a few days of the VASP becoming aware of the suspicion.

**No Tipping-Off:** Reporting entities and their employees are prohibited from disclosing to the customer or to third parties that a suspicious transaction report is being, or has been, submitted to the FIU.

**Customer Identification Data:** All records obtained through CDD processes (identification documents, beneficial ownership information, account opening forms).

**Transaction Data:** Records of all domestic and international transactions, including the nature of the transaction, amount, date, parties involved, and any associated messages or instructions.

**Business Correspondence:** Relevant business correspondence, including records of analysis performed for suspicious transaction reports.

**Duration:** Records must typically be kept for at least **five (5) years** after the business relationship has ended or after the date of an occasional transaction.

**SAMIFIN (Service d'Analyse et de Traitement du Renseignement Financier)**

**Role:** SAMIFIN is Madagascar's Financial Intelligence Unit (FIU). It is responsible for receiving, analyzing, and disseminating suspicious transaction reports (STRs) to law enforcement agencies. It also conducts oversight and monitors compliance with AML/CFT obligations across all reporting entities.

**Banque Centrale de Madagascar (BCM) URL:** https://www.bcm.mg/

**Absence of Crypto-Specific Laws:** There are no laws specifically regulating the issuance, trading, or use of cryptocurrencies in Madagascar.

**General AML/CFT Framework:** The primary legal framework for combating money laundering and terrorist financing is:

**Law No. 2004-020 on Combating Money Laundering and Terrorist Financing (and subsequent amendments).**

*Note:* While this law predates widespread crypto adoption, its general principles concerning suspicious transactions, customer due diligence (CDD), and reporting obligations are expected to apply to any financial activity, including those involving virtual assets, where a nexus to traditional finance or an underlying crime can be established.

**Financial Intelligence Unit (FIU):** The **Cellule de Renseignement Financier de Madagascar (CEN-FIC)** is Madagascar's FIU responsible for receiving, analyzing, and disseminating suspicious transaction reports (STRs) or suspicious activity reports (SARs). VASPs or entities dealing with crypto in Madagascar, even without specific crypto regulation, would likely fall under CEN-FIC's purview for AML/CFT compliance if they interact with the formal financial system.

**FATF Grey List Status:** Madagascar's inclusion on the FATF Grey List means that it is actively working with the FATF to address strategic deficiencies in its AML/CFT regime. This necessitates enhanced due diligence by international financial institutions and VASPs when dealing with Madagascan entities or individuals.

**Obligation for Madagascar:** Madagascar is legally bound to enforce all UN Security Council (UNSC) sanctions regimes.

**VASP Compliance Requirements:** Any VASP, regardless of its location, that serves customers in Madagascar, processes transactions involving Madagascan entities or individuals, or operates in Madagascar, must:

**Screen against the UN Consolidated Sanctions List:** This list includes individuals and entities designated under various UN sanctions regimes (e.g., terrorism, proliferation, specific country regimes).

**Prohibit transactions with sanctioned entities/individuals.**

**Report any hits or suspicious activity** to relevant authorities (e.g., CEN-FIC).

**UN Security Council Resolutions:** Found on the UN website, e.g., via the Sanctions Committees: https://www.un.org/securitycouncil/sanctions/information

**UN Consolidated Sanctions List:** https://www.un.org/securitycouncil/content/un-sc-consolidated-list

**Extraterritorial Application:** Any VASP, globally, is subject to OFAC sanctions if it:

Is a U.S. person (citizen, permanent resident, entity incorporated in the U.S., or operating in the U.S.).

Engages in transactions that touch U.S. persons or entities.

Facilitates transactions for persons on OFAC's lists, regardless of their location.

**VASP Compliance Requirements:** VASPs with a U.S. nexus or those dealing with U.S. persons/systems must:

**Screen against the Specially Designated Nationals and Blocked Persons (SDN) List:** This is OFAC's primary sanctions list.

**Screen against other OFAC sanctions lists** (e.g., Sectoral Sanctions Identifications List, Non-SDN Menu-Based Sanctions List).

**Implement geographic restrictions:** Block transactions to comprehensively sanctioned jurisdictions (e.g., Cuba, Iran, North Korea, Syria, certain regions of Ukraine/Russia).

**Monitor transactions for red flags** indicative of sanctions evasion or illicit finance.

**OFAC Guidance on Virtual Currency:** OFAC has issued specific guidance on sanctions compliance for virtual currency:

**Extraterritorial Application:** EU sanctions apply to:

Persons or entities within the EU.

EU nationals, wherever they are located.

Entities incorporated or constituted under the law of an EU Member State.

Activities taking place, in whole or in part, within the EU.

Any person in respect of business done in whole or in part within the EU.

**VASP Compliance Requirements:** VASPs with an EU nexus or dealing with EU persons/systems must:

**Screen against the EU Consolidated List of Sanctions:** This list includes individuals and entities designated under various EU sanctions regimes.

**EU Sanctions Map (overview of all regimes):** https://www.sanctionsmap.eu/

**Council Regulations:** Specific EU regulations outlining sanctions regimes are published in the Official Journal of the European Union, accessible via EUR-Lex: https://eur-lex.europa.eu/homepage.html

**Customer Due Diligence (CDD):** Screen all new and existing customers (individuals and entities) against relevant sanctions lists during onboarding and on an ongoing basis.

**Beneficial Ownership:** Identify and screen ultimate beneficial owners (UBOs) of corporate customers.

**Transaction Monitoring:** Screen transactions in real-time or near real-time for direct or indirect involvement of sanctioned parties or sanctioned jurisdictions.

**FATF Recommendations:** FATF Recommendation 15 specifically addresses virtual assets and VASPs, requiring them to implement AML/CFT measures, including sanctions screening, similar to traditional financial institutions.

**Madagascar itself is not a comprehensively sanctioned jurisdiction** by the UN, OFAC, or the EU.

However, VASPs must implement geographic restrictions that block transactions to and from individuals or entities located in **sanctioned countries** (e.g., Cuba, Iran, North Korea, Syria, certain regions of Ukraine/Russia) as dictated by OFAC, EU, and UN sanctions programs.

**Madagascar (Domestic):** While there are no crypto-specific penalties, violations of Madagascar's AML/CFT Law No. 2004-020 can result in:

**Imprisonment:** For individuals involved in money laundering or terrorist financing.

Loss of business licenses or ability to operate.

**OFAC Violations:** Penalties can be severe:

**Civil Penalties:** Can range from thousands to millions of U.S. dollars per violation, often determined by a base penalty amount multiplied by factors like egregiousness and cooperation.

**Criminal Penalties:** For willful violations, individuals can face significant prison sentences and fines up to millions of dollars, while corporations can face fines in the tens of millions.

**EU Violations:** Penalties for breaches of EU sanctions are determined by individual Member States but are required to be "effective, proportionate and dissuasive." They can include:

**Imprisonment:** For individuals, particularly for serious or willful breaches.

**Reputational Damage:** Significant negative impact on a company's standing.

**None.** Madagascar does not maintain its own specific sanctions list that explicitly targets crypto entities or individuals involved in virtual asset transactions. Its compliance obligations stem from its domestic AML/CFT law (which applies broadly to financial crimes) and its adherence to international (UN) sanctions.

**Overall Status:** Madagascar has made progress in some areas of its AML/CFT framework as required by the FATF Action Plan. However, the comprehensive regulation and supervision of Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs), including the implementation of the Travel Rule, is **not yet effectively in place.** Madagascar's Mutual Evaluation Report was published in 2018, prior to the significant updates to FATF Recommendation 15 and the issuance of the Interpretive Note on VAs/VASPs in June 2019, which introduced the Travel Rule. Subsequent Follow-Up Reports indicate that addressing risks associated with new technologies and developing a regulatory framework for virtual assets remains an area requiring significant work.

**Whether Adopted:** The FATF Travel Rule requirements (which necessitate VASPs to obtain, hold, and transmit required originator and beneficiary information for virtual asset transfers) **have not been formally adopted or effectively implemented** within Madagascar's legal and regulatory framework for virtual assets. Madagascar's AML/CFT framework likely lacks the specific legislation or regulations necessary to govern VASPs and mandate Travel Rule compliance.

**Effective Date:** Given the lack of formal adoption, there is **no specific effective date** for the FATF Travel Rule in Madagascar.

**Threshold Amounts:** As the Travel Rule is not adopted, there are **no established threshold amounts** for its application in Madagascar.

**Which VASPs are Covered:** Without specific legislation or regulations, there is **no clear definition or coverage** of VASPs for the purpose of the Travel Rule in Madagascar. The existing AML/CFT law may generally apply to financial institutions, but a specific framework for virtual asset service providers is absent or nascent.

**Technical Implementation Requirements:** Since the Travel Rule is not implemented, there are **no defined technical implementation requirements** for VASPs in Madagascar.

**Penalties for Non-Compliance:** Without specific laws or regulations governing the Travel Rule or defining VASP obligations in this regard, there are **no specific penalties** for non-compliance with the Travel Rule. Any penalties would fall under general AML/CFT legislation for unregistered financial activities, if virtual asset activities are deemed to fall under existing financial services definitions, which is often ambiguous without specific VA legislation.

**FATF Jurisdictions under Increased Monitoring (Grey List):** Madagascar is listed here, indicating ongoing strategic deficiencies.

FATF Website - Jurisdictions under Increased Monitoring

FATF Website - Madagascar's Mutual Evaluation Report (2018) (You'll find the 2018 ME report and subsequent follow-up reports here, which would indicate the state of R.15 implementation).

FATF Website - Guidance for VA and VASPs (Updated 2021)

**Not Legal Tender:** Cryptocurrencies are not recognized as legal tender in Madagascar.

**No Official Recognition or Supervision:** The BCM explicitly stated that it does not recognize, regulate, or supervise cryptocurrencies or their underlying technologies.

**High Risk:** The BCM highlighted the risks associated with cryptocurrencies, including price volatility, lack of consumer protection, potential for fraud, and use in illicit activities.

**No Specific Framework:** There is no specific legal or regulatory framework governing the issuance, trading, or custody of cryptocurrencies in Madagascar.

**Banque Centrale de Madagascar (BCM) - Communiqué de Presse du 27 novembre 2018 sur les risques liés aux crypto-monnaies:** https://www.banque-centrale.mg/index.php/communique-de-presse (You would need to navigate to the Communiqué de Presse section and look for the November 27, 2018 statement, which is in French and Malagasy).

**Custodial License Requirements:** There are no specific licenses required for entities wishing to provide cryptocurrency custody services, as such services are not officially recognized or regulated.

**Segregation of Client Assets Rules:** Without a regulatory framework for digital assets, there are no specific rules mandating the segregation of client digital assets from the custodian's own assets.

**Insurance/Bonding Requirements:** There are no specific insurance or bonding requirements for digital asset custodians.

**Cold Storage Mandates:** There are no specific mandates for the use of cold storage (offline storage) for digital assets. Operational security measures would be at the discretion of the service provider, if any exists.

**Qualified Custodian Definitions:** There is no legal or regulatory definition of a "qualified custodian" in the context of digital assets.

**Pending Custody Legislation:** There is no publicly available information or indication of specific pending legislation dedicated to digital asset custody in Madagascar. The focus remains on general warnings and the lack of official recognition.

**Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) Laws:** Madagascar is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG). While not specifically targeting crypto custody, if any entity were to facilitate financial transactions involving digital assets, it might indirectly fall under the purview of general AML/CFT obligations, such as customer due diligence and suspicious transaction reporting, especially if the assets are converted to/from fiat currency within a regulated financial institution. However, this typically applies to financial institutions, and crypto exchanges are not formally regulated as such.