DeFi protocol frontend 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.

Neither for Pure Crypto: For entities operating purely in virtual assets (e.g., crypto-to-crypto exchanges), neither a dedicated registration nor a licensing regime exists. They are currently operating in an unregulated space from a specific virtual asset perspective.

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.

Lei de Prevenção e Combate ao Branqueamento de Capitais e Financiamento ao Terrorismo (Law on the Prevention and Combat of Money Laundering and Terrorist Financing): Lei n.º 14/2013 de 12 de Agosto (and subsequent amendments). This law establishes obligations for various entities, including financial institutions, to implement customer due diligence (KYC), suspicious transaction reporting, record-keeping, and internal controls. While it doesn't explicitly mention virtual assets, the principles would guide future regulation.

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.

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.

Extraterritorial Reach: Sanctions regimes apply based on jurisdiction, currency used (e.g., USD for OFAC, EUR for EU), location of servers, nationality of participants, or nexus to sanctioned entities/persons.

Applicability: Applies to U.S. persons (including citizens, permanent residents, entities organized under U.S. law, and those located in the U.S.), U.S. financial institutions, and potentially any foreign entity that uses the U.S. financial system or facilitates transactions involving sanctioned persons or territories. Crypto transactions involving USD or U.S.-based crypto exchanges fall under OFAC's purview.

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).

Geographic Restrictions: Prohibiting transactions directly or indirectly involving comprehensively sanctioned jurisdictions (e.g., Cuba, Iran, North Korea, Syria, certain regions of Ukraine).

Applicability: Applies to EU citizens and entities, those operating within the EU, and potentially non-EU entities that facilitate transactions involving EU-sanctioned persons or entities, or that clear transactions through EU financial institutions.

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

Geographic Restrictions: Adhering to specific country-based sanctions (e.g., against Russia, Belarus, Venezuela, Syria).

Applicability: UN sanctions are legally binding on all UN member states (including Mozambique) under Chapter VII of the UN Charter. Member states are required to implement these sanctions into their national law.

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).

No Specific Digital Asset Legislation: Mozambique does not have dedicated laws or regulations for digital assets that define them, regulate their issuance, trading, or custody.

Bank of Mozambique (BdM) Position: The Banco de Moçambique (BdM), the country's central bank, has consistently issued warnings regarding the risks associated with cryptocurrencies. It has clearly stated that cryptocurrencies are not considered legal tender in Mozambique and are not regulated or supervised by the central bank. The BdM advises the public against using them due to risks such as price volatility, lack of consumer protection, and potential for money laundering and terrorist financing.