Stablecoin issuer / redeemer in Rwanda

No Specific Classification: There is no specific legislation in Rwanda that explicitly classifies stablecoins as e-money, payment tokens, or securities.

National Payment Systems Act No. 16/2021 of 27/04/2021: This act provides the legal framework for payment systems, payment instruments, and payment service providers in Rwanda. It empowers the NBR to regulate these areas.

E-money Issuer/Payment Service Provider License (if regulated for payments): Any entity wishing to issue electronic money or provide payment services in Rwanda must obtain a license from the National Bank of Rwanda under the National Payment Systems Act and related instructions. This would be the most relevant licensing regime if stablecoins were to be integrated into the payment system. The requirements are rigorous, including:

Instruction No. 01/2020 on Licensing and Operations of Electronic Money Issuers (or its latest iteration): This instruction details the requirements for entities issuing electronic money.

Full Backing: Electronic money funds must be fully backed on a 1:1 basis with fiat currency (Rwandan Francs or other approved currencies).

Segregated Accounts: The funds backing the electronic money must be held in segregated accounts at commercial banks, separate from the issuer's operational funds, to protect customer balances in case of issuer insolvency.

Safeguarding: Measures to safeguard customer funds are paramount in e-money regulations.

Minimum capital requirements.

Robust governance, risk management, and internal control frameworks.

Fit and proper criteria for management and shareholders.

E-money Analogy (if regulated): If stablecoins were to be regulated as e-money, the NBR's instructions for Electronic Money Issuers would likely be applied. These typically require:

E-money Analogy (if regulated): Under e-money regulations, customers have a right to redeem their electronic money at par (1:1) for fiat currency at any time, subject to reasonable fees and notice periods. If stablecoins were regulated as e-money, similar redemption rights would be a fundamental requirement.

Securities Classification (Less Likely for most stablecoins, but possible): If a stablecoin were structured to offer investment rights, interest, or represent a share in an underlying asset pool in a way that qualifies as an investment, it could potentially fall under securities law, regulated by the Capital Market Authority (CMA).

Law No. 20/2017 of 28/04/2017 on Capital Market: This law regulates capital market activities and defines what constitutes a security.

Securities License (if classified as security): If a stablecoin were to be classified as a security, the issuer would need to comply with the licensing and disclosure requirements of the Capital Market Authority.

High Risk: Algorithmic stablecoins, by their nature, carry higher risks of volatility and de-pegging compared to fully fiat-backed stablecoins. It is highly probable that such models would be deemed too risky and would not be permitted under any future regulatory framework without significant adaptations and stringent oversight.

No Specific Stablecoin Reserve Requirements: Since there's no specific stablecoin regulation, there are no explicit reserve requirements for stablecoins.

No Specific Stablecoin Redemption Rights: No specific legal provisions guarantee redemption rights for stablecoin holders in Rwanda.

Law N° 060/2021 of 14/10/2021 on Preventing and Combating Money Laundering and Financing of Terrorism: This is the overarching AML/CFT law in Rwanda. It establishes the legal framework for identifying, reporting, and preventing money laundering and terrorist financing. It defines "reporting persons" broadly to include any person or entity that, by virtue of their activities, may be exposed to ML/TF risks, which can encompass VASPs even if not explicitly named.

Identification and Verification of Customers:

For Individuals: Obtaining and verifying name, address, date of birth, nationality, national identification number (e.g., Rwandan ID card, passport number), and any other unique identifiers. This typically involves documentary verification (e.g., valid ID document) and, where appropriate, non-documentary methods.

For Legal Entities (Companies, Corporations, Trusts): Obtaining and verifying the entity's name, legal form, address, registration number, articles of incorporation, bylaws, and proof of existence. Identifying and verifying the identity of beneficial owners (individuals who ultimately own or control the entity, typically 25% ownership threshold or control through other means), as well as persons acting on behalf of the entity (e.g., directors, authorized signatories).

Risk-Based Approach: Applying CDD measures based on a risk assessment. This means applying enhanced due diligence (EDD) for higher-risk customers (e.g., Politically Exposed Persons (PEPs), customers from high-risk jurisdictions, complex or unusually large transactions) and simplified due diligence (SDD) for lower-risk customers (if permitted and justified). Due to the inherent risks of virtual assets, most VASP activities would generally require standard or enhanced CDD.

Ongoing Monitoring: Continuously monitoring the business relationship and transactions undertaken by customers to ensure they are consistent with the VASP's knowledge of the customer, their business, and risk profile. This includes keeping customer information up-to-date.

Reporting Threshold: There is no minimum monetary threshold for reporting suspicious transactions. Any transaction, regardless of amount, where there are reasonable grounds to suspect that it may be related to money laundering or terrorist financing, must be reported.

Timing: Reports must be made promptly, typically within a specified number of business days (e.g., 2-5 working days) of forming the suspicion.

No Tipping-Off: VASPs and their employees are prohibited from disclosing to the customer or any third party that an STR has been filed or that an investigation is underway.

Duration: Records must generally be kept for a period of at least five (5) years after the end of the business relationship or the date of the transaction.

Customer Identification Records: All documents and information obtained during the CDD process (e.g., copies of identification documents, beneficial ownership information).

Transaction Records: Records of all transactions undertaken, sufficient to permit reconstruction of individual transactions (e.g., sender and receiver details, amounts, type of virtual asset, transaction hash/ID, date and time).

Business Relationship Records: Records pertaining to the business relationship, correspondence, and decisions made regarding the customer's risk profile.

Suspicious Transaction Reports (STRs): Copies of all STRs filed and any internal documentation supporting the decision to file (or not to file).

Financial Intelligence Centre (FIC) of Rwanda

National Bank of Rwanda (BNR) Circulars and Guidelines: The BNR, as the central bank and financial regulator, has issued warnings regarding the risks associated with cryptocurrencies, underscoring the need for AML/CFT compliance should they operate within Rwanda's financial ecosystem. While not specific VASP licensing, these reinforce the general AML/CFT obligations.

Law No. 008/2020 of 08/07/2020 on Anti-Money Laundering and Combating the Financing of Terrorism and Proliferation (AML/CFT-P): This is the cornerstone legislation. It establishes the Financial Intelligence Centre (FIC) as the primary body for receiving and analyzing suspicious transaction reports (STRs) and provides the framework for identifying and sanctioning financial crimes. This law explicitly mandates compliance with international sanctions, particularly those issued by the United Nations Security Council (UNSC).

Law No. 008/2021 of 16/02/2021 Governing Payment Systems: This law provides a framework for licensing and oversight of payment service providers. While not specific to crypto, it lays the groundwork for how VASPs might be regulated and licensed, extending AML/CFT obligations to them. The National Bank of Rwanda (BNR) is the primary regulator for payment systems and is actively working on a comprehensive framework for digital assets.

Screen all customers, beneficial owners, and counterparties against the UN Security Council Consolidated List and other specific UN sanctions lists (e.g., for specific countries or individuals/entities designated for terrorism financing, proliferation, etc.).

Immediately freeze funds and other assets of designated individuals and entities.

Report any hits or frozen assets to the FIC without delay.

Requirements for VASPs: Due to the risk of secondary sanctions and disruption of international financial services, prudent VASPs operating in Rwanda should:

Any gain derived by a company from the sale of cryptocurrencies (whether held as an investment, inventory, or for trading) is generally treated as part of its taxable income.

Services Related to Crypto: Services that are not the mere exchange of crypto, but rather services facilitating crypto transactions (e.g., fees charged by a crypto exchange for providing its platform, wallet services, advisory services, software development for crypto projects) would likely be considered taxable services and subject to the 18% VAT.