Centralized exchange in Lesotho

Lesotho has enacted no virtual-asset statute and operates no virtual-asset service provider licence or registration: the Central Bank of Lesotho's legislation index carries no virtual-asset, crypto-asset or digital-asset instrument, and the September 2023 ESAAMLG mutual evaluation records that Lesotho 'does not have a legal and institutional framework to allow VAs and VASPs activities to be carried out'.

The Central Bank of Lesotho's published position on cryptocurrency consists of two warnings, issued 9 November 2017 and 20 May 2024; the 2024 statement places cryptocurrencies outside the Bank's regulatory perimeter rather than prohibiting them, and Lesotho has never operated a regulatory sandbox or any crypto authorisation pathway.

Lesotho's Money Laundering and Proceeds of Crime Act 2008 (Act 4 of 2008) binds only the accountable institutions listed in its Schedule 1, and the most recent amendment - Legal Notice No. 69 of 2024, gazetted Tuesday 25 June 2024 under section 112 - inserts a single new entry, 'person conducting safekeeping and administration of cash or liquid securities activities on behalf of other persons', so virtual-asset service providers are not accountable institutions in Lesotho and carry no AML/CFT obligation.

Cryptocurrency Exchanges: There are no specific licenses required for a "cryptocurrency exchange" if it deals only with virtual assets. However, if the exchange offers services that involve fiat currency conversion, holds fiat currency for customers, or facilitates remittances in traditional currency, it could potentially be deemed to be conducting activities that fall under existing banking, money transmission, or payment services regulations, which would require a license from the CBL. This is a grey area and depends heavily on the specific nature and integration with traditional financial systems.

Custody Providers: Similarly, there are no specific licenses for "virtual asset custody providers." If the custody provider also provides traditional financial services (e.g., managing fiat bank accounts, lending fiat against crypto), then existing financial services licenses might be required.

Lesotho prescribes no minimum capital for virtual-asset service providers, because no VASP licence exists to attach capital to; minimum cash capital is imposed only on institutions licensed under the Financial Institutions Act 2012 (Act No. 3 of 2012), whose section 9 requires an applicant to fulfil the minimum cash capital set in the Second Schedule, with section 22 requiring that capital be maintained unimpaired.

Lesotho is a member of the Eastern and Southern Africa Anti-Money Laundering Group, and its second-round mutual evaluation - on-site 21 November to 2 December 2022, adopted September 2023 - rates Lesotho Non-Compliant on FATF Recommendation 15 on new technologies; the FATF standards bind Lesotho only politically through ESAAMLG and have not been transposed into any domestic virtual-asset obligation.

The Money Laundering and Proceeds of Crime Act 2008 (Act 4 of 2008), as amended, is Lesotho's principal AML/CFT statute, and its section 14 establishes the Financial Intelligence Unit as a juristic person responsible to the Minister; the body is styled simply 'Financial Intelligence Unit', without a country prefix.

Virtual-asset service providers owe no customer due diligence, record-keeping or suspicious-transaction reporting duty in Lesotho: those duties under the Money Laundering and Proceeds of Crime Act 2008 attach only to accountable institutions listed in Schedule 1, which after Legal Notice No. 69 of 2024 still contains no virtual-asset activity, and no penalty under that Act can be imposed on a business solely for dealing in virtual assets.

Lesotho imposes no local-presence, local-management or domestic-incorporation requirement on virtual-asset service providers, because it licenses no such providers; presence and management requirements arise only on licensing under the Financial Institutions Act 2012 (Act No. 3 of 2012), which governs deposit-taking and non-deposit-taking institutions carrying on financial activities stipulated in their licence.

Lesotho operates no cryptocurrency custody licence and no virtual-asset licensing regime of any kind: the Central Bank of Lesotho legislation index lists no virtual-asset instrument, the Bank's press statement of 20 May 2024 places cryptocurrencies outside its regulatory perimeter, and the ESAAMLG mutual evaluation adopted in September 2023 rated Recommendation 15 Non-Compliant.

Lesotho imposes no client-asset segregation duty on digital-asset custodians: no virtual-asset statute exists, the Financial Institutions Act 2012 sets no safekeeping or client-asset rule, and Legal Notice No. 69 of 2024 extended the AML Schedule only to a person conducting safekeeping and administration of cash or liquid securities, an entry that reaches neither crypto-assets nor custodians of them.

Lesotho prescribes no cold-storage, key-management, hot-wallet or other security standard for digital-asset custodians: the Central Bank of Lesotho legislation index carries no virtual-asset instrument, and the ESAAMLG mutual evaluation adopted in September 2023 records that Lesotho has taken no regulatory measures on virtual assets.

Lesotho law defines no qualified custodian for digital assets: the term has no basis in the Financial Institutions Act 2012 or in any Central Bank of Lesotho instrument, and Lesotho authorises no custodian category for virtual assets.

The Money Laundering and Proceeds of Crime Act, 2008 (Act No. 4 of 2008) is Lesotho's foundational AML statute, but virtual asset service providers are not accountable institutions under its Schedule 1: the most recent Schedule amendment, Legal Notice No. 69 of 2024 published 25 June 2024 under section 112 of that Act, inserts only a person conducting safekeeping and administration of cash or liquid securities, and no virtual-asset category has ever been added.

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Ongoing Monitoring: Continuously monitoring the business relationship, including scrutiny of transactions undertaken throughout the course of the relationship, to ensure that the transactions are consistent with the VASP's knowledge of the customer, their business, and risk profile, including, where necessary, the source of funds.

Source of Funds/Wealth: Given the inherent risks of virtual assets, VASPs are expected to obtain information on the source of funds or source of wealth, especially for large transactions or high-risk customers.

Enhanced Due Diligence (EDD): Required for high-risk situations, which typically include:

Report Suspicious Transactions: Report to the FIU any transaction (or attempted transaction) where they have reasonable grounds to suspect that it may involve the proceeds of criminal activity, or relates to money laundering or terrorist financing. This includes suspicious activities in virtual assets.

Section 17(4) of the Money Laundering and Proceeds of Crime Act, 2008 requires records to be kept for at least five years from the date the relevant business or transaction was completed, but that duty binds only the accountable institutions listed in Schedule 1 of the Act, a list that contains no virtual asset service provider category after Legal Notice No. 69 of 2024.

The Central Bank of Lesotho has issued two public statements on cryptocurrency, on 9 November 2017 and on 20 May 2024; the 20 May 2024 statement warns that cryptocurrencies fall outside the regulatory purview of the Central Bank of Lesotho and that there is no recourse to the Bank in the event of losses, and that offering cryptocurrencies as investment opportunities exposes promoters to sections 27 and 28 of the Capital Market Regulations 2014, which require investment advisers to be licensed by the Bank.

No Lesotho authority has taken a published crypto enforcement action against any named entity: the Central Bank of Lesotho's crypto output consists of the general public warnings of 9 November 2017 and 20 May 2024, and no fine, sanction, revocation or prosecution concerning virtual assets has been published by the Bank, the Financial Intelligence Unit or the Director of Public Prosecutions.