Custodial wallet / SaaS in Yemen

Custodial License Requirements: No licenses are issued for cryptocurrency custody services as such activities are not recognized or permitted.

Segregation of Client Assets Rules: There are no rules for segregating client assets for crypto custody, as regulated custody services are not established.

Insurance/Bonding Requirements: No insurance or bonding requirements exist for crypto custodians.

Cold Storage Mandates: There are no mandates for cold storage, as the regulatory framework does not acknowledge the existence of crypto custody providers.

Qualified Custodian Definitions: There is no definition for a "qualified custodian" for digital assets in Yemen.

Any Pending Custody Legislation: There is no known pending legislation to regulate cryptocurrency custody. The focus, if any regulatory action were to be taken, would likely be on reinforcing the ban or addressing illicit uses rather than creating a framework for legitimate operations.

Central Bank of Yemen (Sana'a Branch): In 2018-2019, the CBY in Sana'a reportedly issued warnings against dealing with cryptocurrencies, deeming them illegal and speculative.

Central Bank of Yemen (Aden Branch): Similarly, the CBY in Aden has also warned against cryptocurrencies.

Yemen does not have dedicated laws or regulations specifically addressing virtual assets, cryptocurrencies, or Virtual Asset Service Providers (VASPs).

In the absence of specific crypto regulations, any entity attempting to operate a cryptocurrency exchange, provide custody services, or process payments using virtual assets would fall into a grey area of legality or risk being interpreted under existing, broader financial laws, or even being outright prohibited.

Custody Providers: Might be interpreted as holding funds or assets on behalf of others, which in a traditional context could require a banking or trust license.

De Facto Prohibition/High Risk: Without a clear legal framework, engaging in such activities carries significant legal risk, including potential penalties for operating an unlicensed financial service, confiscation of assets, or criminal charges, depending on how authorities might interpret activities. It is more likely to be viewed with suspicion than to be regulated.

AML/KYC (Anti-Money Laundering/Know Your Customer): Yemen has general AML/CFT (Combating the Financing of Terrorism) laws, even if their enforcement is challenging and fragmented.

Operating without explicit AML/KYC protocols would be a significant red flag and expose operators to severe legal and reputational risks.

Law No. 1 of 2010 on Combating Money Laundering and Terrorism Financing: This is the primary AML/CFT law in Yemen. It establishes the legal framework for identifying, freezing, and confiscating illicit funds, and mandates reporting obligations for financial institutions.

Identification and Verification: Obtaining and verifying the identity of customers (individuals and legal entities) using reliable, independent source documents, data, or information. This includes name, address, date of birth/incorporation, nationality, identification numbers.

Beneficial Ownership: Identifying and verifying the beneficial owner(s) of legal entities.

Purpose and Nature of Business Relationship: Understanding the purpose and intended nature of the business relationship or occasional transaction.

Ongoing Monitoring: Conducting 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 obliged entity's knowledge of the customer, their business, and risk profile.

Enhanced Due Diligence (EDD): For higher-risk customers, politically exposed persons (PEPs), or complex transactions, more rigorous checks would be required. Given the illegal status of crypto, any involvement would inherently be high-risk.

Obligation to Report: Financial institutions and designated non-financial businesses and professions (DNFBPs) are legally obliged to report any suspicious transactions or activities to the Financial Information Unit (FIU).

Virtual Assets: Given the outright ban, any transaction involving virtual assets would inherently be considered suspicious and a potential predicate offense under the AML/CFT law.

Duration: Financial institutions are required to maintain records of customer identification data, account files, business correspondence, and transaction data for a period of at least five (5) years after the business relationship has ended or the transaction has been completed.

Accessibility: Records must be maintained in a way that allows for rapid retrieval by competent authorities upon request.

Political Instability: The ongoing civil conflict makes official government and central bank websites unstable, inaccessible, or subject to control by different factions.

Lack of Transparency: Regulatory bodies in conflict zones often lack the resources or political will to maintain comprehensive, publicly accessible digital archives of all their directives.

Prohibitive Stance: When an activity is prohibited, there's less incentive to publish detailed regulatory frameworks for it; rather, the focus is on blanket warnings or bans.