Crypto-funded debit card in Mozambique

Banco de Moçambique's Position: The BdM has repeatedly issued warnings and communiqués stating that cryptocurrencies are not legal tender in Mozambique, are not regulated by the central bank, and transactions involving them are high risk. They emphasize that there is no official protection for consumers or investors in virtual assets.

Specific Reference: Aviso Nº 03/GBM/2021, de 2 de Agosto (Warning Nº 03/GBM/2021, of August 2nd). This warning explicitly states that virtual assets are not considered currency, are not issued or guaranteed by the BdM, and are not subject to the legal regime of payment instruments or other financial instruments. It also highlights the risks associated with price volatility, cybercrime, lack of consumer protection, and potential for illicit activities.

No Specific Licenses: As a direct consequence of the above, there are no specific cryptocurrency exchange licenses, crypto custody licenses, or crypto payment processor licenses issued by the BdM or any other Mozambican authority for entities dealing solely in virtual assets.

Licensing for Traditional Financial Services: If an entity's operations involve traditional financial services (e.g., fiat-to-crypto exchanges, crypto payment processors that handle fiat currency, or entities holding fiat funds for crypto purchases), then they might fall under the existing financial licensing requirements supervised by the Banco de Moçambique or other financial regulators, depending on the specific nature of their activities. This would be interpreted under existing laws such as:

Lei do Sistema de Pagamentos (Law of the Payment System): Lei n.º 2/2016 de 27 de Junho – This law governs payment service providers (PSPs) and electronic money institutions (EMIs) that deal with fiat currency. If a crypto firm offers services that involve processing fiat payments, it could potentially be required to obtain a PSP or EMI license.

Lei das Instituições de Crédito e Sociedades Financeiras (Law on Credit Institutions and Financial Companies): Lei n.º 15/2022 de 13 de Dezembro – This law regulates traditional banking and financial institutions. If a crypto platform's activities start resembling deposit-taking or other regulated financial services, it could potentially fall under this.

Capital Requirements: Significant minimum capital requirements would apply, varying based on the type of financial license (e.g., PSPs and EMIs have distinct capital requirements). These are usually denominated in Mozambican Metical (MZN).

AML/KYC Requirements: This is the most likely area where existing regulations would apply, even for purely crypto entities, if Mozambique were to begin enforcing FATF recommendations. Financial institutions are subject to rigorous AML/CFT obligations.

Local Presence: Typically, regulated financial institutions in Mozambique are required to have a physical presence and be incorporated locally.

Fit and Proper Tests: Directors, managers, and significant shareholders of regulated financial institutions must undergo "fit and proper" tests by the BdM to ensure their integrity and competence.

Pre-application discussions with the Banco de Moçambique.

Submission of a comprehensive business plan, outlining services, operational model, risk management, and financial projections.

Documentation of corporate structure, shareholders, and management (including "fit and proper" assessments).

Detailed AML/CFT policies and procedures.

IT and security infrastructure details.

Ongoing supervision and reporting requirements once licensed.

FATF Standards: Mozambique is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), which is an associate member of the Financial Action Task Force (FATF). FATF Recommendations explicitly cover virtual assets and VASPs, requiring them to implement AML/CFT measures, including targeted financial sanctions.

Domestic Implementation: Mozambique's Lei n.º 14/2013, de 12 de Agosto (Law on Preventing and Combating Money Laundering and the Financing of Terrorism) requires reporting entities (primarily traditional financial institutions) to identify customers, monitor transactions, and report suspicious activities. While it doesn't explicitly mention VASPs, the spirit of the law and international standards (FATF) would extend these obligations to any entity facilitating financial transactions. The Unidade de Informação Financeira de Moçambique (UIF), Mozambique's Financial Intelligence Unit, is responsible for enforcing this law.

Sanctioned Entity Screening: Screening all users and counterparties against the Specially Designated Nationals and Blocked Persons (SDN) List and other OFAC sanctions lists. This includes applying the "50% rule" (entities owned 50% or more by one or more blocked persons are also considered blocked).

Sanctioned Entity Screening: Screening against the EU Consolidated List of persons, groups, and entities subject to EU financial sanctions.

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

Asset Freezes: Freezing assets of designated individuals and entities.

Electronic Money (E-money): This is the most likely classification for stablecoins pegged to a fiat currency (like the Metical - MZN, USD, or EUR) and intended for payment purposes.

Notice No. 5/GBM/2021, of March 26 – Regulation on Payment Instruments and Electronic Money Institutions: This regulation further details the requirements for issuing electronic money and licensing Electronic Money Institutions (EMIs).

Electronic Money Institution (EMI) License: Any entity wishing to issue electronic money in Mozambique must be licensed by the Banco de Moçambique as an Electronic Money Institution (EMI) or be a commercial bank.

Full Backing: Notice No. 5/GBM/2021 generally requires electronic money to be issued upon receipt of funds and backed by liquid assets equivalent to the value of the electronic money in circulation.

Segregation: Funds received in exchange for electronic money must be safeguarded, typically by being deposited in a segregated account at a licensed financial institution or invested in secure, low-risk assets.

Minimum capital requirements.

Fit and proper criteria for shareholders and management.

Regulator Name: Banco de Moçambique (Bank of Mozambique)

Entity Targeted: The general public, potential users, and operators of cryptocurrencies within Mozambique. (Not a specific company or individual). Violation Type (Implicit/Guidance): Engaging in financial activities with unregulated assets, operating outside the formal financial system, high risk of fraud/scams, potential for money laundering and terrorist financing. The core message is that cryptocurrencies are not legal tender and are not regulated by the Banco de Moçambique. Penalty Amount: N/A (These are warnings, not direct penalties for a specific enforcement case).

Date: Multiple warnings have been issued over time. A prominent one was issued in April 2021, reiterating previous cautions. These warnings are periodically re-emphasized.