Sierra Leone -- Travel Rule Implementation Regulatory Overview

Sierra Leone, as a member of the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) – an FATF-style regional body – is committed to implementing the FATF Recommendations. However, specific legislation for Virtual Asset Service Providers (VASPs) and the FATF Travel Rule (Recommendation 15) remains largely unaddressed or is in very nascent stages.

Here's a breakdown of the status based on available public information, primarily derived from GIABA's assessments and Sierra Leone's existing AML/CFT framework:

Status of FATF Travel Rule Implementation in Sierra Leone

1. Whether Adopted:

• Not explicitly adopted or fully implemented through specific legislation targeting VASPs and the Travel Rule.
• While Sierra Leone has a foundational AML/CFT law, the Anti-Money Laundering and Combating of Terrorist Financing Act, 2019, this act does not explicitly define "Virtual Assets" or "Virtual Asset Service Providers" in a way that would trigger the specific requirements of the Travel Rule.
• GIABA's Mutual Evaluation Reports and subsequent follow-up reports on Sierra Leone have consistently highlighted deficiencies in addressing new technologies and products, including virtual assets, indicating a lack of comprehensive regulatory and supervisory framework for VASPs. As of the latest public reports, Recommendation 15 (New Technologies) is typically rated as "Partially Compliant" or "Non-Compliant" for Sierra Leone, specifically due to the absence of a legal and regulatory framework to supervise VASPs and implement the Travel Rule.

2. Effective Date:

• There is no specific effective date for the FATF Travel Rule in Sierra Leone because dedicated legislation for it has not been enacted.
• The general Anti-Money Laundering and Combating of Terrorist Financing Act, 2019 came into effect upon its assent, but it does not cover the Travel Rule's specific requirements.

3. Threshold Amounts:

• No specific threshold amounts have been legislated for the Travel Rule in Sierra Leone, as the rule itself is not formally adopted.
• The FATF recommendation is that the Travel Rule applies to virtual asset transfers above USD/EUR 1,000 (or local currency equivalent) for both cross-border and domestic transfers. If Sierra Leone were to implement it, they would likely adopt this or a similar threshold.

4. Which VASPs are Covered:

• No specific categories of VASPs are explicitly covered under a VASP-specific regulatory framework in Sierra Leone.
• In the absence of specific VASP legislation, entities dealing with virtual assets might be subject to general AML/CFT obligations if their activities are broadly interpreted as financial services under the Anti-Money Laundering and Combating of Terrorist Financing Act, 2019, or if the Bank of Sierra Leone issues specific warnings or directives. However, this general coverage does not equate to the explicit VASP definition and Travel Rule application recommended by FATF.

5. Technical Implementation Requirements:

• No specific technical implementation requirements exist for the Travel Rule in Sierra Leone due to the lack of enabling legislation.
• If adopted, VASPs would typically need to implement solutions to collect, store, and transmit required originator and beneficiary information (name, account number/wallet address, physical address, national identity number, etc.) securely and in real-time or near real-time.

6. Penalties for Non-Compliance:

• There are no direct penalties for non-compliance with the FATF Travel Rule in Sierra Leone, as the rule is not explicitly legislated.
• However, if an entity operating in Sierra Leone facilitates illicit financial activities (e.g., money laundering, terrorist financing) using virtual assets, they would be subject to the penalties outlined in the Anti-Money Laundering and Combating of Terrorist Financing Act, 2019, and potentially other criminal statutes. These penalties can include significant fines and imprisonment.

Relevant Legislation and Guidance:

• The Anti-Money Laundering and Combating of Terrorist Financing Act, 2019 (Sierra Leone): This is the primary AML/CFT legislation. While comprehensive for traditional financial institutions, it lacks specific provisions for virtual assets and VASPs as per FATF's Recommendation 15.

  • Finding a direct URL for the full text of the 2019 Act can be challenging outside of government gazettes or legal databases. Often, international bodies like GIABA or UNODC will reference it.
  • You can often find references to its existence and key provisions in reports by GIABA or the Bank of Sierra Leone.

• GIABA Mutual Evaluation Reports (and Follow-Up Reports) for Sierra Leone: These reports provide the most detailed assessment of Sierra Leone's compliance with FATF Recommendations, including those related to new technologies (R.15). These reports consistently point out the need for a comprehensive framework for virtual assets and VASPs.

  • GIABA Website: https://www.giaba.org/
  • You would typically navigate to "Documents" -> "Mutual Evaluation Reports" and search for Sierra Leone's reports, particularly the most recent Enhanced Follow-Up Reports. These usually contain specific ratings and observations regarding Recommendation 15.

• Bank of Sierra Leone (BSL) Statements/Circulars: The BSL, as the central bank, might issue warnings or general guidance regarding cryptocurrencies. While not full regulation, these indicate the regulatory stance.

  • Bank of Sierra Leone Website: https://www.bsl.gov.sl/
  • Check their "Press Releases" or "Publications" sections for any advisories on virtual assets. As of recent checks, BSL has primarily issued warnings about the risks associated with cryptocurrencies rather than establishing a regulatory framework.

In conclusion, while Sierra Leone has a general AML/CFT framework, the specific implementation of the FATF Travel Rule and comprehensive regulation of Virtual Asset Service Providers is not yet in place. This remains an area identified by international bodies like GIABA as needing significant improvement to meet FATF standards.