Crypto-funded debit card 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.

Payment Processors: If a payment processor exclusively handles virtual asset payments without any conversion to or from fiat currency in Lesotho, there isn't a specific license. However, if it facilitates payments that involve fiat currency or traditional money transmission services, it would likely require a Payment Services Provider (PSP) license or similar authorization from the CBL.

Central Bank of Lesotho (CBL): The primary financial regulator.

Financial Intelligence Unit (FIU) Lesotho: Responsible for AML/CFT oversight.

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.

E-money/Payment Tokens: This is the most likely classification for fiat-pegged stablecoins intended primarily for payments.

Lesotho has no National Payment System Act 2020: payment systems are governed by the Payment Systems Act 2014 (Act No. 11 of 2014, gazetted 12 September 2014) and the Payment Systems (Issuers of Electronic Payment Instruments) Regulations 2017 (Legal Notice No. 30 of 2017, gazetted 31 March 2017), neither of which mentions virtual assets, cryptocurrency or stablecoins, and Lesotho imposes no stablecoin redemption right, reserve-attestation duty or issuer authorisation.

Lesotho's e-money backing rules are detailed and public: the Payment Systems (Issuers of Electronic Payment Instruments) Regulations 2017 (Legal Notice No. 30 of 2017), made under sections 15, 16 and 35 of the Payment Systems Act 2014, require an issuer to deposit collected funds into a trust account at a bank licensed in Lesotho (regulation 35(1)) and require, under Schedule 4 item 3(a), that "the balance on the Trust Account shall at all times be equal to the outstanding (unclaimed) balance of all e-money holders". Those regulations never use the words cryptocurrency, virtual currency or digital asset, and no Lesotho instrument extends them to stablecoins.

Lesotho has no National Payment System Act 2020. Issuers of electronic payment instruments are licensed by the Central Bank of Lesotho under the Payment Systems Act 2014 and the Payment Systems (Issuers of Electronic Payment Instruments) Regulations 2017 (Legal Notice No. 30 of 2017), whose regulation 5 provides that "a company shall not conduct the business of issuer of electronic payment instruments unless it is licensed under Part III or as a financial institution under the Financial Institutions Act, 2012", and whose regulation 16 and Schedule 2 set core capital at M500,000. Neither instrument mentions cryptocurrency or stablecoins.

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.

Lesotho has no Financial Intelligence Act 2011: the Financial Intelligence Unit is established by section 14 of the Money Laundering and Proceeds of Crime Act, 2008 as a juristic person responsible to the Minister, suspicious transaction reporting arises under section 18 of that Act and the tipping-off prohibition under section 24(1).

Evidence fact ls.aml.identification-and-verification not found (may have been renamed).

For Individuals: Obtaining and verifying name, residential address, date of birth, nationality, and a unique identification number (e.g., national ID, passport). Verification should be done using reliable, independent source documents or data.

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.

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.

Lesotho's Financial Intelligence Unit is established by section 14 of the Money Laundering and Proceeds of Crime Act, 2008 as a juristic person responsible to the Minister, and receives, analyses and disseminates suspicious transaction reports from the accountable institutions listed in Schedule 1 of that Act, which contains no virtual asset service provider category and gives the Unit no VASP oversight.

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.

Stance on Crypto: The FIU would be involved in monitoring for illicit financial activities involving cryptocurrencies as part of its broader anti-money laundering and combating the financing of terrorism (AML/CFT) mandate.

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.