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Crypto Laundering and Its Impact on Botswana’s Economy: A New Law Takes Shape

Introduction

In a bid to regulate virtual assets businesses and prevent money laundering, the government of Botswana has enacted a new law that grants the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) the power to license and supervise such businesses.

The Need for Regulation

According to Juliana White, Director of Capital Markets at NBFIRA, the law makes provisions for managing, mitigating, and preventing money laundering and financing of terrorism risks associated with virtual assets. It also regulates, monitors, and supervises the issuance of virtual assets and persons conducting virtual asset business in Botswana.

Key Provisions of the Law

Here are some key features of the new law:

• Virtual asset service providers (VASPs) must be registered regardless of their physical location.
• Only legitimate providers will be allowed to transact with Batswana.
• VASPs will be subjected to provisions of the Financial Intelligence Act, ensuring they have adequate anti-money laundering and combating financing of terrorism policies and procedures.

Benefits of the Regulation

The regulation of VASPs is a significant step towards holding industry players accountable, preventing abusive business practices, protecting consumers from being exposed to undue risk, and ensuring disclosure and transparency of information. “We are excited about this law because it will help protect Batswana against illicit service providers,” White said in an interview.

Addressing Capacity Concerns

Some experts have raised concerns about the capacity of NBFIRA to regulate virtual assets service providers. However, White assured that they are aligned with international standards and use a risk-based supervisory approach in supervising all industries under their purview. Capacity building in the area of virtual asset businesses is an ongoing exercise, and NBFIRA continues to engage and leverage available resources to strengthen its capacity in this regard.

Conclusion

The regulation of VASPs is seen as a key foundation for financial stability, and it is imperative for the Authority to license VASPs to build and sustain confidence among local and international stakeholders in the integrity of the industries within the local Non-Bank Financial Institutions (NBFI) sector.