On 14 September 2023, the Notice no. 4/GBM/2023 ("Notice") was published, approving the legal framework applicable to the registration of Virtual Asset Service Providers with the Bank of Mozambique.
The Notice establishes the rules on the process of registering virtual asset service providers with the Bank of Mozambique.
1. Background
The Notice arises firstly from Resolution no. 43/2022, of 21 October, which approved the Strategy to Prevent and Combat Money Laundering, Terrorist Financing and the Financing of Proliferation of Weapons of Mass Destruction (2023-2027), as part of its strategy to strengthen compliance in the prevention and detection of money laundering ("ML"), terrorist financing ("TF") and the financing of proliferation ("FP") of weapons of mass destruction (hereinafter jointly referred to as "ML/FT/FP"), by establishing a duty for regulatory and supervisory bodies to issue guidelines, promote capacity building and more effective supervision, "contributing to the effective implementation of legal requirements in the prevention of ML/TF/MTF, with a special focus on activities with virtual assets, electronic money and exchange bureaux".
In this regard, Law no. 14/2023, of 28 August, which approves the Law on Preventing and Combating Money Laundering and Terrorist Financing, considers virtual asset service providers to be financial institutions for the purposes of complying with their duties in terms of preventing and combating ML/TF.
In particular, Law no. 14/2023 regulates the exercise of activities with virtual assets, determining that these activities can only be carried out by entities that are registered for this purpose with the Bank of Mozambique.
For this purpose, virtual assets "consist of the digital representation of value that can be stored, commercialised or transferred digitally and used for payment or investment purposes, which do not include the digital representation of fiduciary currencies, securities or other financial assets" (see Glossary of Law no. 14/2023 and the Notice).
It is therefore in the use of the powers conferred on it by Article 26(a) of Law no. 14/2023 that the Bank of Mozambique has approved Notice 4/GBM/2023.
2. Scope of the law
The Notice applies to entities that intend to exercise or exercise, exclusively or simultaneously with other economic activities, one or more of the following activities:
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exchange of virtual assets for fiat currencies;
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exchange of one or more forms of virtual assets for others;
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transfer of virtual assets;
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custody or custody and administration services of virtual assets or of instruments that make it possible to control, hold, store or transfer such assets, including private cryptographic keys;
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participation in operations and the provision of financial services related to the offer and/or sale of a virtual asset by an issuer;
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any other activity involving virtual assets.
3. Registration process
The activities related to virtual assets can only be performed by entities previously registered with the Bank of Mozambique.
The registration to perform these activities will always be necessary, even if the applicant entity is already registered with the Bank of Mozambique to perform any other activity.
It should also be noted that foreign virtual asset service providers are also subject to prior authorisation from the Bank of Mozambique if:
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Their services can be subscribed to or are made available to persons residing in Mozambique; or
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Have employees or management located in Mozambique
4. Penalties
The failure to comply with the rules on authorisation for virtual asset service providers to carry out their activities, and therefore the violation of the Notice, constitutes a contravention punishable under the terms of Law no. 14/2023, with a fine of between MZN 2 million and MZN 10 million if the offender is a legal person, and between MZN 600 thousand and MZN 6 million if the offender is a natural person, and ancillary measures may also be applied.
5. Entry into force
The Notice no. 4/GBM/2023 enters into force within (60) sixty days from the date of its publication, i.e. it enters into force on 14 November 2023.
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