Crypto-funded debit card in Namibia

Financial Intelligence Act, 2012 (Act No. 13 of 2012) as amended by the Financial Intelligence Amendment Act, 2017 (Act No. 2 of 2017): This is the cornerstone of Namibia's AML/CFT framework. It establishes the Financial Intelligence Centre (FIC), defines money laundering and terrorist financing offenses, sets out reporting obligations, and outlines due diligence requirements for accountable institutions.

Financial Intelligence Regulations, 2017: These regulations provide further details and procedures for implementing the Financial Intelligence Act.

Identification and Verification of Customers:

Natural Persons: Obtain full name, date of birth, residential address, nationality, identification number (e.g., national ID, passport). Verify identity using reliable, independent source documents, data, or information (e.g., government-issued ID, utility bills).

Legal Persons/Arrangements (Companies, Trusts): Obtain name, legal form, proof of existence, powers that regulate and bind the legal person/arrangement, and the names of relevant persons holding senior management positions.

Beneficial Ownership: Identify and verify the identity of the beneficial owner(s) of the customer, ensuring that VASPs understand the ownership and control structure of the customer. This involves identifying the natural person(s) who ultimately own or control the customer, and/or on whose behalf a transaction is being conducted.

Purpose and Nature of Business Relationship: Understand the purpose and intended nature of the business relationship or occasional transaction.

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.

Enhanced Due Diligence (EDD): Apply EDD in higher-risk situations, which typically include:

Politically Exposed Persons (PEPs).

Customers from high-risk geographic areas (as identified by FATF or FIC).

Complex, unusually large transactions, or unusual patterns of transactions that have no apparent economic or lawful purpose.

Relationships with shell companies.

Transactions involving new technologies or products that favor anonymity.

Travel Rule: Although specific regulations may be pending, consistent with FATF Recommendation 16 (the "Travel Rule"), VASPs should be prepared to obtain and transmit required originator and beneficiary information for virtual asset transfers above a certain threshold (typically EUR/USD 1,000 or equivalent).

Reporting Threshold: There is no monetary threshold for reporting suspicious transactions. Any transaction (or attempted transaction) that gives rise to a suspicion of money laundering or terrorist financing, regardless of the amount, must be reported.

"No Tipping-Off": VASPs and their employees are strictly prohibited from disclosing to the customer or any third party that an STR has been, or will be, submitted.

Customer Identification Records: Copies of all documents used for customer identification and verification (e.g., ID cards, passports, utility bills, company registration documents).

Transaction Records: Details of all transactions conducted by the VASP, including amounts, types of virtual assets, dates, sender and recipient information, and any associated messages. This includes both successful and attempted transactions.

Business Relationship Records: Records pertaining to the establishment and duration of business relationships.

Analysis and Decision Records: Records of any internal analysis undertaken regarding suspicious activity, and decisions made regarding whether or not to file an STR.

STRs Submitted: Copies of all suspicious transaction reports filed with the FIC.

Financial Intelligence Centre (FIC) Namibia

Not Legal Tender: As per the BoN's statement, stablecoins (like all VAs) are not legal tender in Namibia.

Potential as E-money/Payment Tokens: The BoN has explicitly stated that stablecoins could potentially be classified as "electronic money" (e-money) if they meet the criteria stipulated in the Payment System Management Act, 2003 (Act No. 18 of 2003). This would apply if a stablecoin is pegged to the Namibian Dollar or another fiat currency, and is intended to be used as a means of payment.

Potential as Securities: Depending on their structure, especially if they represent an ownership interest in a reserve asset pool, confer rights to profits, or are offered as an investment product, stablecoins could potentially be classified as "financial instruments" or "securities" under the Financial Institutions and Markets Act, 2021 (FIMA). FIMA is a comprehensive piece of legislation regulating the broader financial services industry and markets in Namibia.

Payment System Management Act, 2003 (Act No. 18 of 2003): This Act governs payment systems and e-money in Namibia.

Financial Institutions and Markets Act, 2021 (FIMA): This Act regulates financial institutions and markets.

If Classified as E-money: If a stablecoin is classified as e-money, it would likely be subject to the reserve and safeguarding requirements applicable to licensed e-money issuers under the Payment System Management Act, 2003. These typically involve holding equivalent fiat currency reserves in segregated accounts to ensure 1:1 backing and liquidity.

If Classified as E-money: Issuance of e-money requires a specific license from the Bank of Namibia under the Payment System Management Act, 2003.

If Classified as a Security: Offering a stablecoin classified as a security would require compliance with the licensing and registration requirements for financial services providers under the Financial Institutions and Markets Act, 2021.

Future VASP Licensing: The BoN has explicitly stated its intention to require Virtual Asset Service Providers (VASPs) to be licensed and regulated. While this primarily targets exchanges, custodians, etc., an entity issuing a stablecoin might also fall under VASP definition, or require an e-money or securities license. The upcoming VASP framework will clarify this.

Future VASP Framework: The BoN's ongoing work to develop a regulatory framework for VASPs is expected to include specific rules on financial stability, consumer protection, and potentially reserve requirements for any stablecoins issued or facilitated by regulated VASPs.

Regulator Name: Bank of Namibia (BoN)

June 15, 2022: The BoN issued a comprehensive position paper on Virtual Assets and Virtual Asset Service Providers (VASPs).

Outcome: The position paper clarified that, while the BoN had previously not recognized crypto assets, it now acknowledges them but only for specific purposes and with strong warnings. It confirmed that VASPs are not regulated by the BoN under existing laws and reiterated the high risks. It also signaled the intent to develop a robust regulatory framework.

Regulator Name: Namibia Financial Institutions Supervisory Authority (NAMFISA)

The Bank of Namibia has consistently stated that cryptocurrencies are not legal tender in Namibia.

Supply of Cryptocurrencies: Given the lack of specific guidance, it is likely that the supply of cryptocurrencies themselves (e.g., buying or selling crypto for fiat, or exchanging one crypto for another) would generally be exempt from VAT, similar to other financial services. This aligns with common international interpretations (e.g., EU VAT rules, which many African countries often look to).

Individuals: Namibia employs a progressive tax rate system for individuals, with rates ranging from 0% to 37%. Taxable income above NAD 1,500,000 is taxed at 37%.

For Businesses: If a company holds cryptocurrency as a fixed asset (and not as trading stock), the disposal might not attract CGT directly, but depending on the nature of the business and the asset, gains might be brought into account for income tax purposes, or specific provisions related to business asset disposals could apply.