Law No. 2 of 2005 Regarding Combating Money Laundering

Law No. (2) of 1373 AH / 2005 AD Regarding Combating Money Laundering

General People's Congress

• In implementation of the resolutions of the Basic Popular Conferences, in their annual regular session for the year 1373 AH.
• After reviewing the Penal Code and Criminal Procedure Law, along with their supplementary laws.
• And the Commercial Code and its supplementary laws.
• And Law No. (9) of 1992 AD, regarding the practice of economic activities and its amendments.
• And Law No. (5) of 1426 AH, regarding encouraging the investment of foreign capital and its amendments.
• And Law No. (1) of 1373 AH, regarding Banks.

Article One: Definitions In applying the provisions of this Law, the following words and expressions shall have the meanings indicated alongside each, unless the context indicates otherwise:

• The State: The Great Socialist People's Libyan Arab Jamahiriya.
• The Central Bank: Central Bank of Libya.
• The Governor: Governor of the Central Bank of Libya.
• The Committee: National Committee for Combating Money Laundering.
• The Unit: Financial Information Unit at the Central Bank of Libya.
• Illicit Funds: Funds obtained directly or indirectly from a crime, whether these funds are immovable or movable, tangible or intangible, including documents proving ownership of such funds or any right related thereto.
• Freezing or Attachment: The temporary prohibition imposed by order of the competent authority on the transfer, conversion, disposal, or use of funds.
• Confiscation: The permanent deprivation of ownership of property, pursuant to a judgment issued by the competent court.
• Instruments: Any means used or intended to be used in any manner in the commission of a crime stipulated in this Law.
• Financial Institutions: Any bank, financing company, stock exchange, currency exchange office, financial or monetary intermediary, or any other institution licensed to practice its activities by the Central Bank.
• Other Financial and Commercial Institutions: Institutions licensed to practice their activities by authorities other than the Central Bank, such as insurance companies and service offices.

Article Two: Money Laundering First: A person is considered to have committed the crime of money laundering if they engage in any of the following acts: (1) Owning, possessing, using, exploiting, disposing of, transferring, moving, depositing, or concealing illicit funds, with the intention of disguising their illicit source. (2) Disguising the true nature, location, manner of disposal, movement, rights related to, or ownership/possession of illicit funds. (3) Participating in any of the above in any form of participation.

Second: Funds are considered illicit if obtained from a crime, including crimes stipulated in the International Convention against Organized Crime and its attached protocols, the International Convention against Corruption, and other related international conventions to which the State is a party.

Article Three: Criminal Liability of Institutions Without prejudice to non-criminal penalties stipulated in any other law, financial and commercial institutions in the State shall be criminally liable for the crime of money laundering if committed in their name or on their behalf, and penalties stipulated in Article (4) second shall be imposed upon them.

Article Four: Penalties for Money Laundering First: Without prejudice to penalties stipulated in the Penal Code or any other law, and imposed for crimes that are the source of illicit funds, the crime of money laundering stipulated in Article (2) first shall be punished by imprisonment and a fine equivalent to the value of the property involved in the crime, with confiscation of the property. If the offender contributed to the source crime, whether as a principal or partner, they shall be punished with the penalty of the more severely described crime, with its limits increased by one-third. If the offender knew that the funds were obtained from a crime with a more severe penalty, without being a contributor to it, they shall be subject to the penalty prescribed for that crime.

Second: An institution committing the crime in its name or on its behalf shall be fined an amount equivalent to twice the value of the property involved in the crime, with confiscation. In case of recidivism, the license shall be revoked and the institution closed, in addition to that.

Article Five: Penalties for Offenses Related to Money Laundering First: Any official or employee in a financial, commercial, or economic institution who knows of an act related to money laundering occurring within their institution and refuses to report it to the competent authority shall be punished by imprisonment and/or a fine not exceeding ten thousand dinars and not less than one thousand dinars. Second: Any person who notifies any individual that their transactions are under review or investigation by competent authorities due to suspected illegality shall be punished by imprisonment and/or a fine not exceeding ten thousand dinars and not less than five hundred dinars. Third: Any person violating the provisions of Article Eight shall be fined an amount not exceeding ten thousand dinars and not less than five hundred dinars. The funds involved in this violation shall be held until released by order of the Public Prosecution, unless it is proven that they are related to another crime. Fourth: Any person who reports a money laundering offense to the competent authorities in bad faith and with the intent to harm others, in a manner that allows any criminal measure to be taken to ascertain the truth, shall be punished by imprisonment for a period of not less than one year, even if the report is unsigned or under an alias. Fifth: Any person violating any other provision of this Law, or the regulations, decisions, or circulars issued pursuant thereto, shall be punished by imprisonment and/or a fine not exceeding ten thousand dinars and not less than five hundred dinars.

Article Six: Exemption from Punishment Any person who reports a money laundering offense before its discovery by the competent authorities shall be exempt from punishment.

Article Seven: Freezing, Attachment, and Seizure First: The Governor of the Central Bank of Libya may freeze account balances suspected to be related to money laundering for a period not exceeding one month. Second: The competent Public Prosecutor may order the attachment or seizure of accounts, funds, or instruments suspected to be related to money laundering, provided that the period of attachment/seizure under this paragraph does not exceed three months. Third: The court to which the criminal case is referred, within its jurisdiction, may order attachment/seizure of accounts, funds, or instruments suspected to be related to money laundering, provided that the period does not exceed three months. Fourth: Orders for attachment/seizure of funds stipulated in the preceding two paragraphs shall be executed by the Central Bank, if such funds are held by one of the banks or institutions under its supervision.

Article Eight: Disclosure of Source of Funds Introduced to the Country The Central Bank shall determine the upper limit of amounts allowed to be introduced into the State in cash without requiring disclosure of their source, and any amount exceeding this limit shall be subject to the disclosure system established by the Central Bank.

Article Nine: Financial Information Unit First: A unit named "Financial Information Unit" shall be established at the Central Bank to combat money laundering operations. It receives reports on suspicious transactions from all relevant financial, commercial, and economic institutions, and accepts declarations regarding these transactions from any person or entity. This Unit may exchange information and reports with its counterparts in other countries regarding cases suspected to involve money laundering, in accordance with international conventions to which the State is a party, or according to the principle of reciprocity.

Second: Each bank operating in the State is obliged to establish a subsidiary unit named "Subsidiary Unit for Information Related to Combating Money Laundering". This subsidiary unit monitors and follows up on all operations and transactions conducted by the bank or financial institution, or by counterparties with them, which are suspected to involve illicit transactions or money laundering operations, or operations related to depositing or transferring funds of unknown origin. This subsidiary unit reports information or data related to these operations to the Financial Information Unit at the Central Bank of Libya, as stipulated in paragraph (first) of this Article. A decision by the Governor shall be issued to regulate the Financial Information Unit at the Central Bank, subsidiary units in banks, determine their competencies, and specify their operational procedures.

Article Ten: Role of the Financial Information Unit • The Unit stipulated in paragraph (first) of the preceding Article, after studying the case for which a declaration or report is received, shall inform the Governor of the available information and reports to take necessary measures. • If a direct declaration regarding money laundering cases is received by the Public Prosecution, it shall take necessary measures and notify the Financial Information Unit at the Central Bank of Libya of what is received.

Article Eleven: National Committee for Combating Money Laundering A committee named "National Committee for Combating Money Laundering" is established by this Law, presided over by the Governor of the Central Bank of Libya or their deputy, and comprising one or more representatives from each of the following authorities: • The Central Bank. • Secretariat of the General People's Committee for Financial and Technical Supervision. • Secretariat of the General People's Committee for Justice. • Secretariat of the General People's Committee for Public Security. • Secretariat of the General People's Committee for Finance. • Secretariat of the General People's Committee for Economy and Trade. • Secretariat of the General People's Committee for External Relations and International Cooperation. • Customs Authority. • Tax Authority. Representatives are nominated by their respective authorities, after consulting the Committee Chair. A decision by the Board of Directors of the Central Bank shall be issued to form it and determine members' allowances.

Article Twelve: Competence of the Committee The Committee stipulated in the preceding Article shall be responsible for: • Proposing necessary systems and procedures to combat money laundering. • Facilitating information exchange among represented authorities, and coordinating between them. • Preparing the draft internal regulations governing the Committee's work, issued by a decision of the Board of Directors of the Central Bank. • Proposing the executive regulations for this Law, according to the provision stipulated in Article (16). • Representing the State at international forums and conferences related to combating money laundering. • Preparing the model report on suspicious transactions, stipulated in Article Nine, and specifying how it is sent to the Financial Information Unit at the Central Bank. • Any other competencies authorized by the Board of Directors of the Central Bank to perform.

Article Thirteen: Establishing Appropriate Mechanisms to Combat Money Laundering All competent authorities responsible for licensing or permitting financial, commercial, and economic institutions to practice their activities, as well as authorities tasked with supervising and inspecting them, shall establish appropriate mechanisms to ensure compliance with systems and regulations regarding combating money laundering, and notify the Financial Information Unit at the Central Bank of suspicious cases immediately upon discovery. The Central Bank shall issue instructions for these authorities to follow in combating money laundering, and the Governor shall circulate them via circulars.

Article Fourteen: Obligation to Maintain Confidentiality of Information All authorities obtaining information or data pursuant to this Law shall maintain its confidentiality and disclose it only to the extent necessary for use in investigations, lawsuits, and cases related to money laundering and other crimes stipulated in this Law.

Article Fifteen: Judicial Cooperation with Other Countries in Combating Money Laundering First: The Public Prosecutor, upon request from a judicial authority in another state, may order the tracing, freezing, attachment, or seizure of funds resulting from a money laundering offense, or instruments used therein, if the incident falls under this description according to this Law's provisions, and the state of the requesting judicial authority is linked with Libya by a judicial cooperation agreement or according to the principle of reciprocity.

Second: Recognition may be granted to any judgment or court order issued in another state by a competent court or judicial authority, ordering the confiscation of funds, proceeds, or instruments related to money laundering or related crimes, if the incident falls under this description according to this Law's provisions, and the state of the court or judicial authority is linked with Libya by a judicial cooperation agreement or according to the principle of reciprocity.

Article Sixteen: Executive Regulations, Instructions, and Circulars • The executive regulations for this Law shall be issued by a decision of the General People's Committee, based on the proposal of the National Committee for Combating Money Laundering, and presented by the Governor of the Central Bank. • The Governor of the Central Bank is authorized to issue circulars and instructions related to implementing this Law and its executive regulations, and shall circulate them to relevant authorities.

Article Seventeen: Implementation of the Law Provisions This Law shall be implemented from the date of its issuance, and published in the Code of Legislation and various media.

General People's Congress Issued in: Sirte Date: 12/04/1373 AH / 2005 AD