Zimbabwe

**Innovation Hub:** This serves as a platform for innovators (including those in the VA space) to engage with the RBZ, discuss their proposals, and potentially receive guidance on how their solutions might fit into existing or future regulatory frameworks.

**Regulatory Sandbox:** This is anticipated to be a controlled environment where approved entities can test innovative financial products, services, or business models (including those involving VAs) with real customers, but within defined parameters and under the close supervision of the RBZ, for a limited period. Successful participants in the sandbox may then be eligible for full licensing once the broader framework is established.

**Reserve Bank of Zimbabwe (RBZ):** The central bank, responsible for monetary policy, financial sector stability, and licensing of financial institutions. It is the primary body driving the VA regulatory development.

**Ministry of Finance and Economic Development:** Oversees overall financial sector policy and legislation.

**Financial Intelligence Unit (FIU):** Responsible for combating money laundering and terrorist financing (AML/CFT). Any future VA framework will heavily rely on FIU guidance for compliance.

**Securities and Exchange Commission of Zimbabwe (SECZ):** If certain virtual assets are classified as securities under Zimbabwean law, then SECZ would have jurisdiction over their issuance and trading.

**Virtual Asset Service Provider (VASP) License:** This is the most common umbrella term. It would likely cover:

**Exchanges:** Platforms facilitating the buying, selling, and trading of virtual assets against fiat currency or other virtual assets.

**Custody Providers:** Entities providing services to safeguard virtual assets or instruments enabling control over virtual assets on behalf of others.

**Payment Processors:** Entities engaged in transferring virtual assets, or providing services for the exchange of virtual assets for fiat and vice-versa for payment purposes.

**Issuers:** Entities launching new virtual assets (Initial Coin Offerings, etc.).

**Registration:** In some regimes, registration might be a simpler, less rigorous process for lower-risk activities or for certain types of market participants (e.g., basic disclosures).

**Licensing:** This typically involves a comprehensive application, detailed due diligence, meeting stringent capital, operational, and compliance requirements, and ongoing supervision. Zimbabwe is expected to adopt a full licensing regime for commercial VA operations to ensure financial stability, consumer protection, and AML/CFT compliance.

Likely to be prescribed minimum capital thresholds, which may vary depending on the type and scale of VA services offered, reflecting the inherent risks. This ensures financial stability and ability to absorb operational shocks.

**AML/KYC (Anti-Money Laundering / Know Your Customer):**

This will be a paramount requirement. Virtual asset service providers will be designated as "reporting entities" and will be subject to the provisions of Zimbabwe's **Money Laundering and Proceeds of Crime Act (Chapter 9:24)** and regulations issued by the **Financial Intelligence Unit (FIU)**.

Customer due diligence (CDD) procedures for all users.

Reporting suspicious transactions (STRs) to the FIU.

Appointment of a dedicated AML Compliance Officer.

Robust internal AML/CFT policies and controls.

FATF (Financial Action Task Force) standards, which Zimbabwe is expected to comply with, will heavily influence these requirements.

It is highly probable that licensed entities will need to be **domiciled in Zimbabwe** (i.e., incorporated locally).

Requirements may include a physical office, local directors, and locally-based key personnel (e.g., CEO, Compliance Officer).

Robust cybersecurity frameworks and data protection measures.

Secure storage solutions for virtual assets (hot and cold wallets).

Business continuity and disaster recovery plans.

Audited IT systems and security protocols.

"Fit and Proper" assessment for shareholders, directors, and senior management, focusing on integrity, competence, and financial soundness.

Clear organizational structure, internal controls, and risk management framework.

Transparent disclosure of risks associated with virtual assets.

**Pre-Application Engagement/Consultation:** Initial discussions with the RBZ (via the Innovation Hub) to gauge feasibility and alignment with regulatory objectives.

**Regulatory Sandbox Application (Optional but likely pathway):** For innovative models, applying to participate in the RBZ's regulatory sandbox to test the product/service in a controlled environment.

Detailed business plan (including financial projections, operational model).

Legal entity documentation (incorporation, shareholding).

Comprehensive AML/CFT policy and manual.

IT and cybersecurity policies and audit reports.

Biographical affidavits and "fit and proper" declarations for directors and key personnel.

**Due Diligence and Review:** The RBZ will conduct a thorough review of the application, including background checks, interviews with management, and potentially on-site visits.

**Approval in Principle / Final License:** If all requirements are met, an "approval in principle" may be granted, followed by the issuance of a full license once any remaining conditions are fulfilled.

**Ongoing Supervision and Reporting:** Licensed entities will be subject to regular reporting requirements, audits, and ongoing supervision by the RBZ and FIU.

**Reserve Bank of Zimbabwe (RBZ) Official Website:**

*Note:* While there isn't a dedicated crypto licensing page yet, official statements regarding the Innovation Hub, sandbox, or future VA policies would typically be found under "Press Releases," "Statements," or "Publications." You would need to monitor these sections.

**Money Laundering and Proceeds of Crime Act (Chapter 9:24):**

This is the foundational AML/CFT legislation in Zimbabwe, administered by the FIU.

Access via Veritas Zimbabwe (legal resource): https://www.veritaszim.net/node/3028 (This links to the 2013 version; amendments may exist, but the core act is relevant).

While the FIU may not have a dedicated website, its directives and guidance are issued under the Ministry of Finance and Economic Development and would apply to VASP activities once regulated.

Ministry of Finance and Economic Development: https://www.zim.gov.zw/index.php/ministry-of-finance-and-economic-development/

**FATF (Financial Action Task Force) Recommendations:**

Zimbabwe is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), an FATF-style regional body. Thus, FATF standards (particularly Recommendation 15 and its Interpretive Note on VAs and VASPs) are highly relevant.

**Reserve Bank of Zimbabwe (RBZ):**

**Role:** The central bank responsible for monetary policy, financial stability, and regulating banks and payment systems. Historically, the RBZ issued strong warnings against cryptocurrencies due to concerns about money laundering, illicit financial flows, and consumer protection.

**Role:** If cryptocurrencies or virtual assets were to be classified as securities, the SECZ would likely play a role in their regulation. However, without such classification, its direct involvement is limited.

**Reserve Bank of Zimbabwe Circular (May 2018):** This was a key moment when the RBZ issued a directive to financial institutions prohibiting them from processing or facilitating transactions involving cryptocurrencies, or engaging with exchanges. This was a direct instruction to banks, not a law banning individuals from owning crypto, but it effectively cut off formal financial access. (Finding a direct, public URL to this specific circular may be difficult as central bank directives are often internal or published via press statements rather than standalone legislative documents on a public database.)

**Proposed/Under Consideration (Not Enacted Legislation):**

**Regulatory Sandbox Discussions (Late 2021 - Present):** The Zimbabwean government, through its cabinet, announced in late 2021 that it was exploring regulating cryptocurrencies through a regulatory sandbox. This move signaled a shift from outright prohibition towards cautious engagement and potential future regulation. However, details of any specific bill or act related to this sandbox have not been publicly announced or enacted.

While financial institutions are prohibited from dealing with crypto, there is no explicit law that bans individuals from owning or trading cryptocurrencies using peer-to-peer (P2P) methods or international exchanges that operate outside Zimbabwean banking channels. This creates a largely **unregulated grey market** for individual participants.

However, without regulatory clarity, individuals engaging in crypto transactions do so at their own risk, with no legal recourse or consumer protection mechanisms in place within Zimbabwe.

**Prohibited:** Local cryptocurrency exchanges cannot legally operate within Zimbabwe with formal banking relationships due to the RBZ's directives to financial institutions. Any local platform attempting to operate would do so without official recognition or regulatory oversight, making it highly risky and potentially illegal in practice.

**International Exchanges:** Zimbabweans can access and use international cryptocurrency exchanges (e.g., Binance, Paxful, etc.), but their operations are not regulated by Zimbabwean authorities. The ability to deposit or withdraw fiat currency (ZWL or USD) to/from these platforms via local banks is severely restricted or impossible due to the RBZ's stance.

**Partially (Framework for VASPs):** Zimbabwe, as an FATF member, is committed to implementing FATF Recommendations. In October 2022, Zimbabwe promulgated the **Money Laundering and Proceeds of Crime Amendment Act (No. 6 of 2022)**, which for the first time designated VASPs as "financial institutions" for AML/CFT purposes. This means VASPs are now subject to general AML/CFT obligations such as customer due diligence (CDD), record-keeping, and suspicious transaction reporting (STR).

**Not Adopted (Travel Rule Specifics):** While VASPs are regulated, the specific requirements of the FATF Travel Rule – mandating the collection and sharing of originator and beneficiary information for virtual asset transfers – have **not yet been specifically legislated or enforced**. The FATF's Mutual Evaluation Report for Zimbabwe (October 2022) highlighted this as an area needing improvement, stating that measures to implement the Travel Rule were not yet in place.

**General VASP Regulation:** The **Money Laundering and Proceeds of Crime Amendment Act (No. 6 of 2022)** became effective upon its gazetting in **October 2022**. This is the effective date for VASPs to be considered reporting entities under Zimbabwe's AML/CFT framework.

**Travel Rule:** There is **no effective date** for the Travel Rule in Zimbabwe, as the specific legislative and regulatory measures for its implementation are still pending.

**For Travel Rule:** Since the Travel Rule is not specifically implemented, there are **no specific threshold amounts** for the collection and transmission of originator and beneficiary information on VA transfers.

**For General AML Reporting (as Financial Institutions):** VASPs, like other financial institutions, are subject to existing thresholds for currency transaction reporting (CTR) and suspicious transaction reporting (STR) as stipulated by the Money Laundering and Proceeds of Crime Act. These thresholds typically apply to fiat currency transactions but would extend to the fiat equivalent of virtual asset transactions if deemed suspicious or exceeding certain reportable limits in the context of their general AML obligations. The standard FATF Travel Rule threshold for VASP-to-VASP transfers is USD/EUR 1,000, but this is not currently enforced in Zimbabwe.

The **Money Laundering and Proceeds of Crime Amendment Act (No. 6 of 2022)** provides a broad definition of VASPs, covering:

Exchange between virtual assets and fiat currencies.

Exchange between one or more forms of virtual assets.

Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets.

Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.

Essentially, any entity in Zimbabwe that performs these services professionally and for financial gain is considered a VASP and falls under the purview of the AML/CFT Act.

**For Travel Rule:** As the Travel Rule is not specifically implemented, there are **no specific technical implementation requirements** for the secure sharing of originator and beneficiary information for VA transfers.

**For General AML/CFT:** VASPs, as regulated financial institutions, are generally required to have internal systems and controls for:

Customer Due Diligence (KYC processes).

Record-keeping of transactions and customer data.

Monitoring transactions for suspicious activities.

Reporting suspicious transactions to the Financial Intelligence Unit (FIU).

Having an appointed AML/CFT Compliance Officer.

While these are general AML requirements, they indirectly necessitate a certain level of technical capability to manage and store data securely.

While there are no specific penalties for Travel Rule non-compliance (as it's not yet implemented), VASPs that fail to comply with their existing AML/CFT obligations under the **Money Laundering and Proceeds of Crime Amendment Act (No. 6 of 2022)** can face significant penalties, which typically include:

**Administrative Penalties:** Fines, directives, warnings, or restrictions imposed by the supervisory authorities (e.g., Financial Intelligence Unit, Reserve Bank of Zimbabwe).

**Criminal Penalties:** For serious breaches (e.g., failure to report suspicious transactions, facilitating money laundering), individuals and corporate entities can face substantial fines and imprisonment.

**Revocation of License/Operating Authorization:** VASPs found to be non-compliant may have their licenses or authorizations to operate revoked.

**Money Laundering and Proceeds of Crime Amendment Act (No. 6 of 2022):** This Act designates VASPs as financial institutions for AML/CFT purposes.

**URL:** FATF Mutual Evaluation Report of Zimbabwe - October 2022 (Key section: Executive Summary, and specifically Chapter 4 on Recommendation 15/16 for VAs and VASPs)

**Fintech Sandbox Participants:** Entities participating in the RBZ's National Fintech Sandbox might be allowed to test innovative solutions that could involve elements of custody, but this is an experimental phase and not a full licensing regime.

**Segregation of Client Assets Rules:**

**No Specific Rules:** As there are no specific custodial licenses or regulatory frameworks, there are no explicit rules mandating the segregation of client digital assets from a custodian's proprietary assets. Best practices in traditional finance would suggest segregation, but this is not legally mandated for crypto custody in Zimbabwe.

**No Specific Requirements:** There are no specific insurance or bonding requirements for digital asset custodians.

**No Specific Mandates:** While cold storage is a widely recognized security best practice for managing digital assets, there are no specific legal mandates or requirements for its use by custodians in Zimbabwe.

**No Specific Definition:** The term "qualified custodian" and its associated definitions, commonly found in more mature regulatory jurisdictions (like the US under SEC rules), do not exist within Zimbabwe's current regulatory landscape for digital assets.

**National Financial Technology Sandbox (2021):** This is the most significant development pointing towards future regulation. Launched by the RBZ, the sandbox allows innovative fintech solutions, including those involving digital assets, to be tested in a controlled environment. While not legislation itself, insights gained from the sandbox are expected to inform the development of future laws and regulations.

**Regulatory Reference:** While a specific direct link to the full framework might require deeper access to RBZ documents, its launch and purpose have been widely reported.

**RBZ Governor, Dr. John Mangudya's statements:** Regularly reported in local media regarding the sandbox and crypto studies.

**Ongoing Studies by the RBZ:** The RBZ has repeatedly stated it is studying various aspects of digital assets, including cryptocurrencies and the feasibility of a Central Bank Digital Currency (CBDC). These studies are expected to lay the groundwork for any future regulatory frameworks, which could eventually include provisions for custody.