Remote VASP serving residents in Chad

BEAC Circular No. 001/GR/2022/GR of March 28, 2022, explicitly prohibits financial institutions and all economic agents in the CEMAC region from engaging in activities related to crypto-assets, including holding, exchanging, selling, or purchasing crypto-assets. This directive was reinforced by a subsequent letter to all banks and financial institutions.

Evolving Stance (Strict Regulation of Virtual Assets): More recently, the BEAC has introduced a framework for "virtual assets" which, while not legalizing cryptocurrencies broadly, defines and establishes a very strict control mechanism. Regulation R-2023/CEMAC/UMAC/CM/04 of April 2023 on the Regulation of Virtual Assets in the CEMAC Zone is the cornerstone of this framework.

Crucially, Article 4 of Regulation R-2023/CEMAC/UMAC/CM/04 states that any activity relating to virtual assets (including issuance, trading, exchange, and custody) is prohibited unless expressly authorized by the BEAC.

Implication: For entities operating within Chad (or any CEMAC country), the scope for legally conducting VASP activities is severely limited, if not outright eliminated. This means that domestic VASPs are effectively banned, and any attempt to operate one would be a direct violation of regional banking laws.

Lack of Specific VASP Legislation: While Chad has general AML/CFT legislation aligned with international standards (primarily driven by FATF recommendations and its regional body, GABAC), it lacks specific national legislation that explicitly licenses, regulates, or defines AML/KYC requirements for VASPs as a distinct category of financial institutions.

Prohibition: The Banque des États de l'Afrique Centrale (BEAC) has issued directives (e.g., circulars in 2022 and earlier) that effectively prohibit or severely restrict cryptocurrency activities within the CEMAC zone, including Chad. These directives aim to safeguard monetary stability and prevent financial crime risks.

Implication for VASPs: This means that, currently, legally establishing and operating a VASP in Chad is highly problematic, if not outright impossible. Any operations would be considered unauthorized and potentially illegal.

Establishing a business relationship.

Carrying out occasional transactions above a certain threshold (e.g., EUR 1,000 equivalent for VASPs, as per FATF guidance).

Identification and Verification of Customer Identity:

Identification of Beneficial Owners: Take reasonable measures to understand the ownership and control structure of the customer and identify the natural persons who ultimately own or control the customer. This often involves identifying individuals holding 25% or more of shares or voting rights, or otherwise exercising control.

Ongoing Monitoring: Continuously monitor the business relationship, including 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.

Enhanced Due Diligence (EDD): Apply EDD for higher-risk categories, which would typically include:

Obligation to Report: VASPs would be legally obligated to report any suspicious transactions, attempts at transactions, or activities that give rise to a suspicion of money laundering or terrorist financing to Chad's Financial Intelligence Unit (FIU).

Primary Legislation: Law N°004/PR/2020 modifying Law N°006/PR/2010 on the Fight against Money Laundering and Terrorist Financing. This is the cornerstone legislation defining reporting obligations, predicate offenses, and the functions of the Financial Intelligence Unit.

Entity Targeted: All entities and individuals within the CEMAC zone (including Chad) engaging in or facilitating cryptocurrency activities. Violation Type: Engaging in or facilitating activities related to crypto-assets, which the BEAC deemed unauthorized, illegal, and a threat to financial stability, monetary policy, and consumer protection within the CEMAC region. Penalty Amount: The circular itself does not specify a monetary penalty for specific past violations, but rather prohibits all activities related to crypto assets and warns of "sanctions" for non-compliance. These sanctions would be determined by national authorities in adherence to the BEAC's directive. Outcome: Prohibition of crypto assets and related activities in the CEMAC region. This means that cryptocurrency exchanges, trading, and mining are effectively illegal within Chad. While specific enforcement actions against individuals or companies in Chad haven't been widely publicized, the directive provides the legal framework for such actions to be taken by Chadian authorities.

Initial Stance (Prohibition): The BEAC initially adopted a very strict stance against cryptocurrencies and virtual assets. In Circular No. 001/GR/2022 of May 6, 2022, the BEAC reminded all financial institutions and entities under its control of the absolute prohibition of all activities related to cryptocurrencies in the CEMAC zone. This explicitly included the holding, exchange, receipt, and payment in cryptocurrencies.

The BEAC views cryptocurrencies as inconsistent with the CEMAC monetary policy and the stability of its financial system. Engaging in such activities would likely be seen as a violation of existing banking and financial regulations rather than an activity requiring a specific crypto license.