Sierra Leone -- AML/CFT Compliance Regulatory Overview

**The Anti-Money Laundering and Combating of Financing of Terrorism Act, 2018:** While an online copy with a direct, stable URL is not readily available through general government searches, this Act is the primary domestic legislation for AML/CFT in Sierra Leone. It would be accessible via legal databases or directly from the **Bank of Sierra Leone (BSL)** or the **Financial Intelligence Unit – Sierra Leone (FIU-SL)**.

**Identification and Verification of Customer Identity:**

For natural persons: Name, address, date of birth, nationality, unique identification number (e.g., national ID, passport). Verification through reliable, independent source documents, data, or information.

For legal persons/arrangements: Name, legal form, proof of existence, powers that regulate and bind the legal person, and identification of persons holding senior management positions.

**Identification of Beneficial Owners:** Take reasonable measures to understand the ownership and control structure of the customer and identify the ultimate natural person(s) who own or control the customer.

**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 or wealth.

**Risk-Based Approach:** Apply enhanced CDD for higher-risk customers or transactions (e.g., Politically Exposed Persons (PEPs), cross-border correspondent relationships, complex structures, high-value transactions, or transactions involving jurisdictions with weak AML/CFT regimes). Conversely, simplified CDD may be applied for lower-risk scenarios.

**Source of Funds and Source of Wealth:** For higher-risk customers or transactions, VASPs are expected to take reasonable measures to establish the source of funds and source of wealth involved.

**Obligation:** Any VASP that has reasonable grounds to suspect that funds or assets (including virtual assets) are the proceeds of a criminal activity or are related to terrorist financing must promptly report its suspicions to the FIU-SL.

**No Tipping-Off:** VASPs and their employees are prohibited from disclosing to the customer or any third party that a STR is being, or has been, submitted.

**Transaction Records:** Records of all transactions, domestic and international, for a minimum period of **five (5) years**. These records must be sufficient to permit reconstruction of individual transactions and patterns of transactions.

**Customer Identification Data:** Records of the information obtained through the CDD process (e.g., identity documents, beneficial ownership information) for a minimum period of **five (5) years** after the business relationship has ended or after the date of an occasional transaction.

**Records of Analysis:** Records of the analysis undertaken in respect of complex, unusual, or high-risk transactions.

**The Financial Intelligence Unit of Sierra Leone (FIU-SL)**

**Role:** The FIU-SL is the central national agency responsible for receiving, analyzing, and disseminating suspicious transaction reports and other financial information to combat money laundering and terrorist financing. It provides guidance and oversight to reporting institutions.

**Consult the FIU-SL:** Directly engage with the FIU-SL for the most up-to-date guidance and requirements specific to virtual asset activities.

**Seek Legal Counsel:** Obtain independent legal advice from local experts familiar with Sierra Leonean financial and AML/CFT laws to ensure full compliance.

**Monitor for Updates:** Stay informed about any new legislation, regulations, or directives issued by the Sierra Leonean authorities concerning virtual assets.

**Compliance Requirement:** UN Security Council resolutions imposing sanctions are legally binding on all UN member states, including Sierra Leone. Sierra Leone incorporates these obligations into its domestic law, primarily through its anti-money laundering and combating the financing of terrorism framework.

**Focus:** UN sanctions programs typically target:

Individuals and entities involved in terrorism (e.g., ISIL (Da'esh) and Al-Qaeda Sanctions List).

Proliferation of weapons of mass destruction (e.g., DPRK, Iran).

Specific country-related regimes (e.g., Democratic Republic of Congo, Libya, Sudan, Yemen).

**VASP Obligations:** Any VASP operating in or from Sierra Leone must screen its customers and transactions against the UN Consolidated Sanctions List and specific UN Security Council Committee Sanctions Lists. Assets of listed individuals/entities must be frozen without delay, and any attempt to circumvent these measures must be reported.

**UN Security Council Sanctions Committees:** https://www.un.org/securitycouncil/sanctions/information

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

**Compliance Requirement:** While OFAC sanctions primarily target "U.S. persons" (U.S. citizens, permanent residents, entities organized under U.S. law, and anyone within the United States), their extraterritorial reach is significant.

Any VASP in Sierra Leone that deals with U.S. persons, processes transactions in USD, or uses U.S.-based financial infrastructure (e.g., exchanges, banking partners) is effectively obligated to comply with OFAC sanctions.

Non-U.S. persons can also face secondary sanctions for engaging in certain activities with sanctioned entities or jurisdictions.

**Focus:** OFAC administers a wide array of sanctions programs, including those targeting terrorism, narcotics trafficking, human rights abuses, and specific countries (e.g., Iran, North Korea, Cuba, Syria, Russia/Ukraine-related sanctions, Venezuela).

**VASP Obligations:** VASPs must screen all customers and transactions against OFAC's Specially Designated Nationals and Blocked Persons (SDN) List and other relevant sanctions lists. They must block (freeze) the assets of SDNs and report such blocking to OFAC. Transactions involving sanctioned jurisdictions or entities are prohibited.

**Compliance Requirement:** Similar to OFAC, EU sanctions primarily bind EU persons and entities. However, any VASP in Sierra Leone that has a nexus to the EU (e.g., serving EU customers, having an EU presence, or dealing with EU-based financial institutions) should comply with EU sanctions.

**Focus:** EU sanctions mirror many UN sanctions and also include autonomous regimes targeting specific countries (e.g., Russia, Belarus) or thematic issues (e.g., human rights).

**VASP Obligations:** VASPs should screen customers and transactions against the EU Consolidated Financial Sanctions List. Assets of listed individuals/entities must be frozen, and dealings with them are prohibited.

**EU Sanctions Map:** https://www.sanctionsmap.eu/ (Provides an interactive overview of EU sanctions regimes)

**EU Consolidated Financial Sanctions List:** https://data.europa.eu/data/datasets/sanctions?locale=en

**Ongoing Screening:** VASPs must implement robust systems to screen all prospective and existing customers (individuals, entities, and beneficial owners) against all relevant international sanctions lists (UN, OFAC, EU) on an ongoing basis. This includes initial onboarding and real-time transaction monitoring.

**Beneficial Ownership:** Identification and screening of ultimate beneficial owners are crucial to prevent sanctioned individuals from hiding behind shell entities.

**Technology:** Utilize reliable sanctions screening software that incorporates AI/machine learning to handle the volume and complexity of virtual asset transactions and evolving sanctions lists.

VASPs must implement controls to prevent or block transactions involving sanctioned jurisdictions (e.g., North Korea, Iran, Crimea, parts of Ukraine, Syria, etc.) or entities/individuals located in or operating from these areas. This requires robust IP address blocking, geographic data analysis, and sanctions list screening.

**Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD):**

**Identify and Verify:** Collect and verify customer identity information (KYC) to FATF standards, which Sierra Leone’s AML/CFT Act is based upon.

**Risk-Based Approach:** Categorize customers and transactions by risk level. Higher-risk customers (e.g., Politically Exposed Persons (PEPs), those from high-risk jurisdictions, or engaging in complex transactions) require EDD.

**Source of Funds/Wealth:** For high-value or suspicious crypto transactions, VASPs should seek to understand the source of funds and wealth.

**Suspicious Transaction Reports (STRs):** VASPs must report any suspicious transactions, including those potentially linked to sanctions evasion, to the Financial Intelligence Unit – Sierra Leone (FIU-SL).

**Freezing of Assets:** Upon identifying a match with a sanctioned entity/individual, VASPs must immediately freeze any associated virtual assets and report the action to the FIU-SL.

Maintain records of customer identification, transactions, and compliance activities for a minimum period (typically 5-7 years, as per FATF recommendations).

Establish an independent compliance function.

Implement internal policies, procedures, and controls for sanctions compliance.

Provide regular training to staff on AML/CFT and sanctions requirements.

**Financial Intelligence Unit – Sierra Leone (FIU-SL):** http://www.fiu.gov.sl/ (The FIU-SL is the supervisory body for AML/CFT compliance and would issue guidance related to sanctions.)

**Monetary Fines:** Substantial financial penalties for institutions and individuals.

**Imprisonment:** Individuals found guilty of offenses, including facilitating sanctions evasion or money laundering, can face significant jail terms.

**Reputational Damage:** Significant harm to an entity's reputation, potentially leading to loss of customers, banking relationships, and operational difficulties.

**Loss of License/Operating Authority:** For regulated entities, non-compliance could lead to revocation of licenses.

**Secondary Sanctions (for non-U.S./EU entities):** A VASP in Sierra Leone that violates U.S. or EU sanctions could face penalties from those jurisdictions, even if not directly present there, potentially losing access to those markets and financial systems.

**Note:** Specific regulations or amendments explicitly naming and detailing requirements for VASPs under this Act or a new dedicated framework are likely to emerge as the regulatory landscape matures.