Zambia -- Travel Rule Implementation Regulatory Overview

As of late 2023/early 2024, Zambia has not yet fully adopted or implemented the FATF Travel Rule specifically for Virtual Asset Service Providers (VASPs). While Zambia has a foundational Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) framework, it has been identified as lacking specific provisions to adequately regulate virtual assets and VASPs in line with FATF Recommendation 15 and the Travel Rule (which derives from Recommendation 16 applied to virtual assets).

Here's a breakdown based on available information, primarily from the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), of which Zambia is a member, and its Mutual Evaluation Reports (MERs):

Status of FATF Travel Rule Implementation in Zambia

1. Whether Adopted:

   • No, not specifically for virtual assets and VASPs. Zambia's primary AML/CFT legislation, the Anti-Money Laundering and Countering of Terrorism Act, No. 13 of 2010 (and its amendments), as well as associated regulations, does not explicitly extend to the comprehensive regulation of virtual assets or the oversight of VASPs as financial institutions or Designated Non-Financial Businesses and Professions (DNFBPs).
   • The ESAAMLG's 2019 Mutual Evaluation Report of Zambia highlighted significant gaps in this area. It noted that virtual assets were not adequately covered by the AML/CFT framework, and there was no specific licensing or registration regime for VASPs.
   • While Zambia is committed to implementing FATF standards, the specific legal and regulatory framework for virtual assets, including the Travel Rule, is still under development or consideration.

2. Effective Date:

   • N/A. Since the specific framework for virtual assets and the Travel Rule has not been adopted, there is no effective date.

3. Threshold Amounts:

   • N/A. Without specific legislation covering VASPs, there are no defined threshold amounts for the Travel Rule. For traditional wire transfers, the threshold amounts for originator and beneficiary information requirements would typically follow existing AML/CFT regulations.

4. Which VASPs are Covered:

   • Currently, none are explicitly covered under a specific regulatory regime for virtual assets. As per the 2019 ESAAMLG MER, Zambia had not identified or defined VASPs under its AML/CFT laws, nor had it imposed AML/CFT obligations on them. Any entity operating with virtual assets in Zambia currently does so in a largely unregulated environment from an AML/CFT perspective, though the Bank of Zambia has issued warnings regarding the risks associated with cryptocurrencies.

5. Technical Implementation Requirements:

   • N/A. As the Travel Rule has not been formally adopted for VASPs, there are no specific technical implementation requirements.

6. Penalties for Non-Compliance:

   • N/A for specific Travel Rule non-compliance by VASPs. Because there is no specific framework defining AML/CFT obligations for VASPs, there are no penalties directly linked to non-compliance with the Travel Rule.
   • However, if an entity were found to be involved in money laundering or terrorist financing activities using virtual assets, they would be subject to the general penalties under the Anti-Money Laundering and Countering of Terrorism Act, No. 13 of 2010, which include severe fines and imprisonment.

Relevant Legislation & Guidance (with URLs):

• Anti-Money Laundering and Countering of Terrorism Act, No. 13 of 2010: This is Zambia's principal AML/CFT legislation. While it is the foundational law, it does not specifically address virtual assets or VASPs. Finding an official, up-to-date government-published link can be challenging, but it forms the basis of the Financial Intelligence Centre's (FIC) operations.
  • Reference: You can often find summaries or references to this act on the FIC website.
• Financial Intelligence Centre (FIC) Zambia: The FIC is Zambia's financial intelligence unit and the primary body for AML/CFT oversight.
  • Website: https://www.fic.gov.zm/
• Bank of Zambia (BoZ): The central bank has issued advisories warning the public about the risks associated with cryptocurrencies due to their unregulated nature. This indicates a cautious approach rather than active regulation.
  • Website: https://www.boz.zm/ (Look for press releases or circulars on cryptocurrencies in their publications section).
• ESAAMLG Mutual Evaluation Report of Zambia (2019): This report provides the most comprehensive public assessment of Zambia's compliance with FATF Recommendations, explicitly detailing the lack of regulation for virtual assets and VASPs.
  • Access Report: Go to the ESAAMLG website, navigate to "Documents" -> "Reports" -> "Mutual Evaluation Reports" -> "Zambia."
  • ESAAMLG Website: https://www.esaamlg.org/

In Summary: Zambia is in the early stages of addressing the regulatory challenges posed by virtual assets. While the country has a legal framework for AML/CFT, it needs to update and expand this framework to specifically include virtual assets and VASPs to comply with FATF Recommendation 15 and implement the Travel Rule. The 2019 ESAAMLG report clearly indicates that significant work is required in this area.