Eswatini

**An investment of money or assets:** The investor commits capital to acquire the token.

**In a common enterprise:** The investment is pooled with others, or the value of the token is tied to a broader project or business venture managed by others.

**With an expectation of profits:** The investor anticipates financial gain (e.g., capital appreciation, dividends, revenue sharing, or other forms of return) from holding the token.

**Derived solely or substantially from the efforts of others:** The profits are expected to come from the managerial or entrepreneurial efforts of a third party (the issuer, promoter, or other entities), rather than the investor's own efforts.

**Security Tokens:** These are tokens explicitly designed to represent traditional financial instruments.

**Equity Tokens:** Represent ownership in an entity, entitling holders to profits, voting rights, etc.

**Debt Tokens:** Represent a loan made to an entity, entitling holders to interest payments and principal repayment.

**Asset-Backed Tokens:** Represent fractional ownership in real-world assets (e.g., real estate, art, commodities) with an expectation of profit from the asset's performance.

**Profit-Sharing Tokens:** Tokens that grant holders a share of the profits generated by a project or company.

**Certain Utility Tokens:** While typically designed to provide access to a product or service, a utility token can be reclassified as a security if:

It is primarily purchased with an expectation of future price appreciation driven by the efforts of the issuer (i.e., speculative investment).

It is marketed as an investment opportunity rather than a means to access a service.

Its functionality is not yet fully developed, and its value is speculative.

**Certain NFTs (Non-Fungible Tokens):** While most NFTs are unique digital assets, they can be considered securities if:

They represent fractional ownership in a larger asset or project that promises returns from the efforts of others.

They are part of a scheme where the promoter manages the underlying asset for the benefit of token holders, who expect a profit.

They are marketed as investment vehicles with an expectation of profit from the efforts of the issuer or a third party (e.g., shared revenue from a gaming metaverse, fractional ownership in high-value collectibles managed by a fund).

**Prospectus Requirements:** For public offerings of securities, a comprehensive prospectus must be prepared and registered with the FSRA. This prospectus must disclose all material information relevant to the investment, risks, and the issuer.

**Licensing:** Issuers, promoters, or financial intermediaries involved in offering or distributing securities may need to be licensed by the FSRA as financial services providers (e.g., investment advisors, brokers, collective investment scheme managers).

**Disclosure and Reporting:** Ongoing disclosure obligations may apply, including periodic financial reporting and notification of material events.

**Corporate Governance:** Compliance with relevant corporate governance standards for public companies or entities issuing securities.

**Private placements:** Offerings made to a limited number of sophisticated investors.

**Small offerings:** Offerings below a certain monetary threshold.

**Licensed Trading Platforms:** Trading would likely need to occur on an exchange or platform licensed and regulated by the FSRA as a securities exchange. Unregulated trading platforms would be illegal for securities.

**Market Conduct Rules:** Regulations concerning insider trading, market manipulation, and other unfair trading practices would apply.

**Investor Protection:** Rules regarding transparency, best execution, and fair dealing by market participants would be in force to protect investors.

**Reporting and Surveillance:** Licensed platforms would be required to report trading activity and may be subject to surveillance by the FSRA to ensure market integrity.

Issue **warnings or cease-and-desist orders**.

Impose **administrative penalties and fines**.

Initiate **legal proceedings** for non-compliance, which could lead to injunctions, disgorgement of ill-gotten gains, and criminal charges in severe cases (e.g., fraud, operating an unlicensed financial service).

**Blacklist** individuals or entities involved.

**Financial Services Regulatory Authority (FSRA) Website:** This is the authoritative source for Eswatini's financial regulation. Look for their "Legislation" or "Acts" section.

*Navigate to "Acts" or "Legislation" from the menu.*

**The Capital Markets Act, 2010:** This is the core legislation defining securities and regulating capital markets.

*Often found under the FSRA website's "Legislation" section.*

*Alternatively, search for "Capital Markets Act, 2010 Eswatini" in official government gazettes or legal databases if the direct link isn't on the FSRA site.* (Direct link to the Act's full text is not universally available online outside of official government publication portals which can be country-specific and sometimes require subscriptions).

**The FSRA Act, 2010:** This Act establishes the FSRA and outlines its powers and functions.

*Also typically found under the FSRA website's "Legislation" section.*

**Central Bank of Eswatini (CBE) - Warnings:** The CBE has previously issued notices warning the public about the risks associated with virtual currencies, including their speculative nature, volatility, lack of regulatory oversight, and potential use in illicit activities. These notices typically state that virtual currencies are not recognized as legal tender in Eswatini and are not regulated by the CBE.

*Finding relevant notices requires checking the CBE's official publications or press releases section. Specific direct links to crypto-specific warnings can be ephemeral but general stance is consistent.*

**Central Bank of Eswatini Official Website:** https://www.centralbank.org.sz/

**Financial Services Regulatory Authority (FSRA):**

**Financial Services Regulatory Authority Official Website:** https://www.fsra.org.sz/

**AML/CFT Registration:** Eswatini, as a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), is committed to implementing FATF standards. This typically means that VASPs, including those providing custody, are required to be registered or licensed with the FIU or a designated authority for AML/CFT compliance. This registration focuses on identifying the VASP, its beneficial owners, and ensuring it has robust AML/CFT policies and procedures.

**Prevention of Organised Crime Act (POCA) & FIU Act:** The primary legislation addressing AML/CFT in Eswatini includes the **Prevention of Organised Crime Act** and the **Financial Intelligence Unit Act**. These acts, along with their accompanying regulations, are the most likely place where definitions of "virtual assets" and "VASPs" and their reporting obligations would be found. While specific details on *custody* per se might be absent, the entity *providing* custody would be subject to VASP AML/CFT obligations.

*Specific amendments or regulations under these Acts defining VASPs and their obligations would need to be consulted.*

**FIU Eswatini Official Website:** https://www.fiu.org.sz/ (Look for legislation, annual reports, or guidance documents.)

**FATF Recommendations:** Eswatini, through its membership in ESAAMLG, is expected to continue enhancing its legal framework to fully comply with FATF Recommendation 15 on new technologies and Virtual Asset Service Providers (VASPs). This implies that future amendments or new regulations *could* introduce more specific requirements for VASPs, which might eventually encompass more detailed aspects of custody.

**ESAAMLG Website:** http://www.esaamlg.org/ (Provides information on AML/CFT efforts and FATF implementation in the region.)

As a member state of the UN, Eswatini is legally bound to implement UN Security Council Resolutions (UNSCRs) that impose targeted financial sanctions. These resolutions identify individuals, entities, and groups involved in terrorism, proliferation of weapons of mass destruction (WMD), or other threats to international peace and security.

These are typically translated into domestic law, requiring financial institutions (including VASPs, as per FATF standards) to freeze assets and prohibit transactions with designated persons/entities.

**ISIL (Da'esh) & Al-Qaida Sanctions List:** Maintained by the 1267/1989/2253 Committee.

**Taliban Sanctions List:** Maintained by the 1988 Committee.

**Other UN Sanctions Regimes:** Pertaining to specific countries (e.g., Democratic People's Republic of Korea, Iran, Libya, Yemen, etc.) and individuals/entities associated with violations of peace and security.

**Legal Basis in Eswatini:** Eswatini's AML/CFT laws, notably the **Prevention of Organised Crime Act, 2018**, and the **Money Laundering and Financing of Terrorism (Prevention) Act, 2011 (as amended)**, mandate compliance with these international obligations. The Financial Intelligence Unit (FIU) of Eswatini is responsible for ensuring the implementation of these measures.

While not legally binding sanctions themselves, the FATF Recommendations provide the international standard for AML/CFT. Eswatini is expected to adhere to these.

**Recommendation 6 (Targeted Financial Sanctions):** Requires countries to implement targeted financial sanctions related to terrorism and WMD proliferation without delay.

**Recommendation 15 (New Technologies):** Specifically applies AML/CFT obligations to VASPs, including the obligation to implement sanctions screening.

**Jurisdictional Nexus:** A VASP in Eswatini becomes subject to OFAC sanctions if:

It conducts transactions in U.S. dollars.

It uses U.S.-origin software or technology.

It has U.S. persons (citizens, permanent residents, or entities incorporated in the U.S.) as customers, beneficial owners, or counterparties.

It routes transactions through the U.S. financial system.

**Specially Designated Nationals and Blocked Persons (SDN) List:** The primary list of individuals and entities with whom U.S. persons and entities subject to U.S. jurisdiction are generally prohibited from dealing.

**Sectoral Sanctions Identifications (SSI) List:** Targets specific sectors of designated countries.

**Other Sanctions Programs:** Comprehensive programs targeting countries like Cuba, Iran, North Korea, Syria, Venezuela, etc., and thematic programs (e.g., counter-terrorism, cyber, human rights abuses).

**OFAC's Crypto Guidance:** OFAC has issued specific guidance on virtual currency sanctions compliance, emphasizing that all entities subject to U.S. jurisdiction, including VASPs, must take a risk-based approach to block virtual currency and prevent transactions with sanctioned persons or jurisdictions.

**Jurisdictional Nexus:** Similar to OFAC, EU sanctions apply if a VASP in Eswatini:

Deals with EU persons (citizens, residents, or entities incorporated in the EU).

Conducts transactions involving EU member states.

Uses EU-based infrastructure or services.

**EU Consolidated List of persons, groups, and entities subject to EU financial sanctions:** Contains all designated individuals and entities across various EU sanctions regimes.

**Obligation:** Screen all customers, beneficial owners, counterparties, and transactional data (where feasible and technologically possible) against relevant sanctions lists, including:

UN Sanctions Lists (implemented via Eswatini law).

OFAC SDN List and other relevant OFAC lists (due to extraterritoriality).

EU Consolidated Sanctions List (due to extraterritoriality).

**Process:** Implement robust, automated screening tools for initial onboarding and ongoing monitoring. This includes screening wallet addresses, transaction senders/receivers, and ultimate beneficial owners.

**Frequency:** Regular screening is crucial as sanctions lists are updated frequently.

VASPs must implement controls to prevent transactions involving individuals or entities in comprehensively sanctioned jurisdictions (e.g., North Korea, Iran, Cuba, Syria as per OFAC/EU).

This includes blocking IP addresses, denying service to residents of such countries, and restricting wallet movements to/from these regions.

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

Identify and verify the identity of customers and their beneficial owners.

Conduct EDD for high-risk customers, including those from high-risk jurisdictions or politically exposed persons (PEPs).

Understand the source of funds/wealth, especially for large transactions or those originating from or destined for high-risk areas.

Monitor transactions for red flags indicative of sanctions evasion or illicit activity (e.g., unusual transaction patterns, transactions with known illicit addresses, use of mixers/tumblers without legitimate justification).

Maintain records of all CDD, screening results, transaction monitoring alerts, and any actions taken (e.g., blocking funds, reporting) for the period required by Eswatini law (typically 5-7 years).

**Suspicious Transaction Reports (STRs) / Suspicious Activity Reports (SARs):** Report any activity suspected of being related to money laundering, terrorism financing, or sanctions evasion to the Eswatini Financial Intelligence Unit (FIU).

**Sanctions Matches:** Immediately report any confirmed sanctions matches or blocked assets to the FIU and, if applicable, to OFAC (for U.S. nexus) or relevant EU authorities.

**No Crypto-Specific Lists:** Eswatini does not maintain any distinct, crypto-specific sanctions lists.

**General Application:** Any person or entity designated on a UN, OFAC, or EU sanctions list is considered sanctioned, regardless of whether they are transacting in traditional finance or virtual assets. Eswatini's FIU and other regulatory bodies would expect VASPs to treat all such designations equally.

**Financial Penalties:** Substantial fines for individuals and legal entities (VASPs).

**Imprisonment:** Individuals found guilty of violations can face lengthy prison sentences.

**Asset Forfeiture:** Assets involved in or derived from illicit activities, including sanctions evasion, can be seized and forfeited.

**Revocation of License:** VASPs found in non-compliance may have their operating licenses revoked by the Financial Services Regulatory Authority (FSRA) or other relevant authorities.

**Reputational Damage:** Significant harm to the VASP's reputation and trust.

**International Repercussions:** For violations of OFAC or EU sanctions, penalties can also be imposed by those jurisdictions, potentially including blocking of assets, severe fines, and denial of access to global financial markets.

**Prevention of Organised Crime Act, 2018 (POCA):**

This is a cornerstone of Eswatini's AML/CFT framework, providing for the investigation and prosecution of organised crime, money laundering, and terrorism financing. It typically mandates compliance with UN sanctions.

*Finding the Act:* Often published on the website of the Eswatini Parliament or Attorney General's Office, or sometimes via the Central Bank of Eswatini (CBE) or Financial Intelligence Unit (FIU) under relevant legislation.

**Approximate URL (search query based, direct link may vary):** You would typically search for "Eswatini Prevention of Organised Crime Act 2018" on the government's official sites.

*Likely Host:* Central Bank of Eswatini (CBE) Legal Frameworks: https://www.centralbank.org.sz/laws-notices-and-circulars/ (You may need to navigate to find the specific act within this section).

*Financial Intelligence Unit Eswatini:* https://www.fiu.org.sz/ (Check their "Legal Framework" or "Publications" section).

**Money Laundering and Financing of Terrorism (Prevention) Act, 2011 (as amended):**

This Act directly addresses ML/TF prevention and often includes provisions for sanctions implementation.

**Approximate URL (search query based):** Similar to POCA, look on CBE, FIU, or FSRA websites.

**Central Bank of Eswatini (CBE):**

Regulatory body for financial institutions, may issue directives.

Oversees non-bank financial institutions, which may include VASPs as the regulatory framework evolves.

**Eswatini Financial Intelligence Unit (FIU):**

The national centre for the receipt and analysis of suspicious transaction reports.

**UN Security Council Consolidated Sanctions List:**

**FATF Recommendations (including Recs 6 & 15):**

**OFAC Sanctions Programs and SDN List:**

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