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Sierra Leone

Retail_Trading_Status

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#136
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Archived
Created
2025-04-12 06:49
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Executive Summary

Retail cryptocurrency trading in Sierra Leone is Restricted due to the Bank of Sierra Leone's (BSL) stance. The BSL, the primary financial regulator, does not issue licenses for crypto-related financial activities under existing laws like the Banking Act 2019, effectively prohibiting formal trading platforms. While no specific crypto laws exist, the BSL's actions and public warnings create a restrictive environment, though individual ownership and P2P trading are not explicitly outlawed.

Key Pillars

The primary regulator is the Bank of Sierra Leone (BSL), which oversees financial institutions and enforces regulations. The BSL's approach is to apply existing financial laws, such as the Banking Act 2019 and the Other Financial Services Act 2001, to crypto-related activities. Core compliance requirements include AML/KYC, governed by the Anti-Money Laundering and Combating of Financing Terrorism Act, 2012. Licensing from the BSL is required for financial institutions, but the BSL has explicitly stated it does not issue licenses to crypto businesses, effectively prohibiting their formal operation.

Landmark Laws

  • Banking Act 2019: Used by the BSL to regulate financial institutions, including those potentially dealing with cryptocurrencies, by requiring a valid license to operate.
  • Other Financial Services Act 2001: Similar to the Banking Act, it provides the legal basis for the BSL to regulate financial services and require licensing.
  • Anti-Money Laundering and Combating of Financing Terrorism Act, 2012: Establishes the AML/CFT framework in Sierra Leone, enforced by the BSL and FIU, requiring KYC/CDD for licensed financial institutions.

Considerations

Cryptocurrencies are not specifically classified under Sierra Leone law, leading to a legal grey area. The BSL's warnings highlight perceived risks associated with unregulated crypto investments. Operational challenges arise from the BSL's refusal to license crypto businesses, limiting access to formal platforms and potentially driving activity towards informal channels.

Notes

In 2019, the BSL banned two crypto companies for operating without a license, demonstrating its enforcement stance. The government has expressed some interest in blockchain technology for applications like digital identity systems. Sources suggest some dates may be prospective, likely intended as 2023/2024 instead of 2024/2025, indicating the rapidly evolving nature of information in this domain. Individuals might use informal channels or foreign platforms to engage in crypto transactions, but they would still be subject to general AML laws if their activities were deemed suspicious.

Detailed Explanation

The retail cryptocurrency trading status in Sierra Leone is classified as Restricted. While no specific laws explicitly ban individual ownership or P2P trading of cryptocurrencies, the Bank of Sierra Leone (BSL), the country's central bank and primary financial regulator, imposes a restrictive environment. The BSL applies existing financial regulations, such as the Banking Act 2019 and the Other Financial Services Act 2001, requiring entities engaging in financial services to obtain a license. The BSL has explicitly stated it does not issue licenses for cryptocurrency investment or trading, effectively prohibiting formal platforms. In 2019, the BSL shut down at least two firms ("My Residual Income Global -SL Limited," also known as "My Coin") for operating without a license, deeming their activities illegal. Public warnings have been issued by the BSL, advising citizens to avoid unlicensed crypto investment schemes, with participation being "entirely at his/her own risk." This discourages public involvement and signals regulatory disapproval. While the government has shown interest in blockchain technology for digital identity systems, this does not extend to cryptocurrency trading, which the BSL views critically due to financial stability and consumer protection concerns. Sierra Leone has an AML/CFT framework, governed by the Anti-Money Laundering and Combating of Financing Terrorism Act, 2012, enforced by the BSL and the Financial Intelligence Unit (FIU). Standard KYC (National ID, Voter ID, Passport, Driver's License) and Customer Due Diligence (CDD) are mandatory for licensed financial institutions. However, because no crypto-specific businesses are licensed, these AML/KYC regulations do not directly apply to crypto platforms operating formally within Sierra Leone. Individuals engaging in crypto transactions through informal channels or foreign platforms are still subject to general AML laws if their activities are deemed suspicious or linked to illicit finance. Several sources confirm the BSL's stance, including a 2021 Awoko Newspaper SL report referencing a 2019 press release where the BSL warned the public against making deposits for investments with "My Residual Income Global-SL Limited" or any other business operating such schemes without a valid license. APAnews - African Press Agency reported in 2019 that the BSL stated none of the institutions involved in crypto trading were registered with the central bank as required by law, and therefore they were operating illegally, referencing the Banking Act, 2011 and the Other Financial Services Act, 2001.

Summary Points

Okay, here's the regulatory analysis report on Retail_Trading_Status in Sierra Leone, converted into a clear, well-structured bullet point format:

Retail Cryptocurrency Trading Status in Sierra Leone: Regulatory Analysis (April 12, 2025)

I. Overall Regulatory Status:

  • Status: Restricted (Effectively Prohibited)
  • Rationale: While no specific law explicitly bans individual crypto ownership or P2P trading, the Bank of Sierra Leone's (BSL) actions and stance create a highly restrictive environment.

II. Key Regulatory Bodies and Their Roles:

  • Bank of Sierra Leone (BSL):
    • Central bank and primary financial regulator.
    • Applies existing financial regulations (Banking Act 2019, Other Financial Services Act 2001) to crypto-related businesses.
    • Refuses to issue licenses to businesses taking deposits for crypto investment/trading.
    • Issues public warnings against engaging with unlicensed crypto investment schemes.
    • Enforces AML/CFT regulations.
  • Financial Intelligence Unit (FIU):
    • Enforces AML/CFT regulations alongside the BSL.

III. Important Legislation and Regulations:

  • Banking Act 2019: Used by BSL to regulate financial institutions, including those potentially dealing with crypto.
  • Other Financial Services Act 2001: Similar to the Banking Act, used to regulate financial services beyond traditional banking, impacting crypto businesses.
  • Anti-Money Laundering and Combating of Financing Terrorism Act, 2012: Governs AML/CFT framework.

IV. Requirements for Compliance (Theoretical, as no licenses are issued):

  • If licenses were issued, compliance would require:
    • Obtaining a valid license from the BSL to operate as a financial institution.
    • Implementing Know Your Customer (KYC) procedures:
      • Acceptable identification: National ID, Voter ID, Passport, Driver's License.
    • Implementing Customer Due Diligence (CDD) procedures.
    • Adhering to AML/CFT regulations.

V. Notable Restrictions and Limitations:

  • No Licensed Crypto Businesses: The BSL does not license any crypto exchanges, brokers, or investment platforms.
  • Effective Prohibition of Formal Platforms: Formal crypto platforms cannot legally operate within Sierra Leone due to the lack of licensing.
  • Public Warnings Discouraging Participation: The BSL actively discourages public involvement in crypto investment through public warnings.
  • Risk Borne by Individuals: The BSL warns that participation in unlicensed crypto schemes is "entirely at his/her own risk."

VI. Recent Developments and Changes:

  • 2019 Crackdown: The BSL shut down at least two firms ("My Residual Income Global -SL Limited," also known as "My Coin") engaged in unlicensed crypto investment activities.
  • Ongoing Refusal to License: The BSL continues to deny licenses to businesses seeking to take deposits for crypto investing or trading (as of 2024).
  • Government Interest in Blockchain (Separate from Crypto): The government has shown some interest in blockchain technology for applications like digital identity systems, but this does not imply approval of cryptocurrency trading.

VII. AML/KYC Considerations:

  • Established Framework: Sierra Leone has an established AML/CFT framework.
  • Direct Application Limited: As no crypto-specific businesses are licensed, the direct application of AML/KYC regulations to crypto platforms operating formally within the country is currently not applicable.
  • General AML Laws Still Apply: Individuals engaging in crypto transactions through informal channels or foreign platforms are still subject to general AML laws if their activities are deemed suspicious.

Full Analysis Report

Report: Retail Cryptocurrency Trading Status in Sierra Leone

Date: April 12, 2025

Analyst: Specialized Financial Regulatory Analyst AI

Topic: Retail_Trading_Status

Description: This section assesses the legality and regulatory environment for individual citizens and residents in Sierra Leone concerning the buying, selling, and holding of cryptocurrencies. It details applicable laws, regulations, official positions, and the status of requirements like Know Your Customer (KYC) and Anti-Money Laundering (AML) for crypto-related activities.

1. Current Status: Gray-Zone

2. Detailed Narrative Explanation:

The status of retail cryptocurrency trading in Sierra Leone is best described as Restricted. While there is no specific legislation explicitly outlawing the individual ownership or peer-to-peer (P2P) trading of cryptocurrencies, the actions and official stance of the Bank of Sierra Leone (BSL), the country's central bank and primary financial regulator, create a highly restrictive environment that effectively prohibits formal cryptocurrency trading and investment activities.

  • Lack of Specific Crypto Regulation: Sierra Leone has not enacted dedicated laws to govern cryptocurrencies or digital assets. This means activities like buying, selling, or holding crypto exist in a legal grey area from a specific crypto-law perspective. [9]
  • BSL's Restrictive Stance via Existing Laws: The BSL applies existing financial regulations, primarily the Banking Act 2019 and the Other Financial Services Act 2001, to crypto-related businesses. These laws require entities engaging in financial services, including taking deposits or facilitating investments, to obtain a valid license from the BSL. [4, 6, 11]
  • Refusal to License Crypto Businesses: The BSL has explicitly stated that it does not issue licenses to any business or financial institution for the purpose of taking deposits for cryptocurrency investment or trading. [3, 4, 5, 6, 8] In 2019, the BSL actively shut down at least two firms ("My Residual Income Global -SL Limited," also known as "My Coin") engaged in such activities, declaring their operations illegal due to the lack of a BSL license. [4, 6, 11]
  • Public Warnings: The BSL has issued public warnings advising citizens against engaging with unlicensed entities offering crypto investment schemes, stating that participation is "entirely at his/her own risk." [6] This signals strong regulatory disapproval and discourages public involvement.
  • Effective Prohibition of Formal Platforms: Due to the BSL's refusal to grant licenses under existing financial laws, formal cryptocurrency exchanges, brokers, or investment platforms cannot legally operate within Sierra Leone. This severely restricts access for retail traders looking for regulated and secure avenues to participate in the crypto market.
  • Distinction from Blockchain Technology: It's noteworthy that the government has shown some interest in blockchain technology for applications like digital identity systems [2, 4, 7, 20]. However, this interest in the underlying technology does not translate into approval or regulation of cryptocurrency trading or investment activities, which are viewed critically by the BSL through the lens of financial stability and consumer protection under existing mandates.
  • AML/KYC Framework: Sierra Leone has an established Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) framework, primarily governed by the Anti-Money Laundering and Combating of Financing Terrorism Act, 2012, and enforced by the BSL and the Financial Intelligence Unit (FIU). [10, 17] Standard KYC procedures (requiring identification like National ID, Voter ID, Passport, Driver's License) and Customer Due Diligence (CDD) are mandatory for licensed financial institutions. [10, 17] However, as no crypto-specific businesses are licensed in Sierra Leone, the direct application of these AML/KYC regulations to crypto platforms operating formally within the country is currently not applicable. Any individual engaging in crypto transactions through informal channels or foreign platforms would still be subject to general AML laws if their activities were deemed suspicious or linked to illicit finance.

In summary, while individual possession might not be explicitly illegal under a specific crypto statute, the BSL's regulatory actions, refusal to license crypto-related financial activities under existing laws, and public warnings create an environment where formal retail trading is effectively prohibited, leading to the classification of Restricted.

3. Relevant Text Excerpts:

  • On BSL Licensing Stance (2024): "Sierra Leone's apex bank banned two crypto companies in 2019. The bank also denied issuing licenses to businesses or financial institutions to take deposits for crypto investing or trading." - Source: Pulse Nigeria / News Central TV [3, 8]
  • On Unregulated Status & BSL Actions (2024): "Adoption Status: Cryptocurrencies remain unregulated in Sierra Leone and the country's apex bank does not issue licenses to Crypto-based companies... In 2019, the Bank of Sierra Leone (BSL) banned two crypto companies from operating because they were not issued licenses." - Source: UPay Blog [4]
  • On BSL Warning to Public (2021): "Referencing their press release dated 10th April 2019 in which they noted, among other things, that the bank has not licenced or permitted any business(es) or financial institution(s) to take deposit from the public for the purpose of investment or trading in crypto-assets (for example bitcoin)... 'The bank of Sierra Leone hereby advise members of the public that are engaging or seeking to engage in any financial transaction by way of making deposits for investments with “My Residual Income Global-SL Limited” or any other business operating such schemes without a valid licence issued by the Bank of Sierra Leone does so entirely at his/her own risk.'" - Source: Awoko Newspaper SL [6]
  • On Illegality of Unlicensed Operations (2019): "Mr Berestford Taylor, Assistant Director, Secretaries Department, BSL, said none of the institutions [involved in crypto trading] were registered with the central bank as required by law, and therefore they were operating illegally. 'The Banking Act, 2011 and the Other Financial Services Act, 2001 provide that no person shall engage in banking business, take deposits or issue financial products to the general public unless that person holds a valid licence issued by the Bank of Sierra Leone,' he stated..." - Source: APAnews - African Press Agency [11]
  • On Legal Ambiguity (2024): "The legality of Pi Network in Sierra Leone is currently unclear, as the country has not established specific regulations for cryptocurrencies. While there are no laws explicitly banning Pi Network, the Bank of Sierra Leone has expressed caution about the risks associated with digital currencies." - Source: Kotigi.com [9]
  • On Existing AML/KYC Laws: "AML/KYC regulations in Sierra Leone are enforced by a number of regulators including the Bank of Sierra Leone; Sierra Leone Financial Intelligence Unit (FIU). The primary legislation governing KYC/AML in Sierra Leone is the Anti-Money Laundering and Combating of Financing Terrorism Act, 2012." - Source: Smile ID [10]

4. Source URLs:

  • [3] News Central TV (May 15, 2024): https://newscentral.africa/african-countries-that-banned-cryptocurrency/ (Archived equivalent if original changes)
  • [4] UPay Blog (December 11, 2024 - Note: Date seems prospective, likely intended as 2023/2024): https://blog.upay.co/crypto-adoption-around-the-world-sierra-leone/
  • [5] TechRound (June 10, 2024): https://techround.co.uk/guides/which-countries-ban-crypto/
  • [6] Awoko Newspaper SL (May 28, 2021): https://awokonewsspaper.sl/central-bank-issue-warnings-to-unlicensed-firms-public/
  • [8] Pulse Nigeria (May 15, 2024): https://www.pulse.ng/news/local/10-african-countries-that-have-banned-cryptocurrency/k895g8e
  • [9] Kotigi.com (October 24, 2024 - Note: Date seems prospective, likely intended as 2023/2024): https://kotigi.com/is-pi-network-legal-in-sierra-leone-must-read/
  • [10] Smile ID (Digital Identity Verification for Sierra Leone page, undated): https://usesmileid.com/supported-countries/sierra-leone-identity-verification
  • [11] APAnews - African Press Agency (April 11, 2019): https://apanews.net/en/news/sierra-leone-clamps-down-on-cryptocurrency-traders (Link may require search if direct URL changes)
  • [17] Guaranty Trust Bank (Sierra Leone) Limited (AML/CFT Framework page, undated): https://www.gtbank.sl/about-us/aml-cft-framework (Example of institutional AML policy referencing SL law)
  • [2] Thomson Reuters (Cryptocurrency Regulation Tracker, requires subscription/access): https://legal.thomsonreuters.com/en/insights/articles/cryptocurrency-regulation-tracker (General reference mentioning SL status as 'Undecided' but potentially less current than news reports)
  • [7] Crowdfund Insider (August 1, 2018): https://www.crowdfundinsider.com/2018/08/136957-cryptocurrency-regulation-in-africa-part-2-from-gabon-to-zimbabwe/ (Historical context on early blockchain interest)
  • [20] Baker McKenzie (Blockchain and Cryptocurrency in Africa Report, undated, likely pre-2019 crackdown): https://www.bakermckenzie.com/-/media/files/insight/publications/2018/11/report_blockchainandcryptocurrencyafrica_en.pdf (Historical context)

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