Central Bank of Libya Circular 4/2026: Anti-Money Laundering and Counter-Terrorism Financing Controls for Exchange Companies and Offices

Central Bank of Libya
P.O. Box 1103
Telegraphic Address: Misrifybia - Tripoli - Libya

Circular: Erm N (4 / 2026)
Date: 5 February 2026

To: Chairmen of the Boards of Directors of licensed exchange companies.
Managers of licensed exchange offices.

Subject: Anti-Money Laundering and Counter-Terrorism Financing Controls for Exchange Companies and Offices

Greetings,

Based on the provisions of Law No. (1) of 2005 and its amendments, Law No. (2) of 2005 regarding Money Laundering, Law No. (3) of 2014 regarding Counter-Terrorism, the instructions issued by the National Committee for Combating Money Laundering and Financing of Terrorism, and the local and international regulations governing these matters, as well as the supervisory and regulatory role exercised by the Central Bank of Libya on banks and financial institutions under its supervision.

Therefore, we inform you of the issuance of the Central Bank of Libya's instructions regarding "Anti-Money Laundering and Counter-Terrorism Financing Controls for Exchange Companies and Offices," attached to this circular, for compliance and implementation. The Banking and Currency Supervision Department and the Libyan Financial Intelligence Unit will oversee their implementation, and all legal measures will be taken against anyone who violates the implementation of these controls and any instructions issued by the Central Bank of Libya regarding this matter.

Peace be upon you.

Abdul Majid Muhammad Al-Maqouri
Director of the Banking and Currency Supervision Department

Copies to:
Mr. / The Governor
Mr. / The Deputy Governor
Mr. / Director of the Libyan Financial Intelligence Unit.
Mr. / Deputy Director of the Banking and Currency Supervision Department for Banking Supervision Affairs / Benghazi Mr. / Deputy Director of the Banking and Currency Supervision Department for Islamic Banking Affairs Mr. / Deputy Director of the Banking and Currency Supervision Department for Office Supervision and Compliance Monitoring Mr. / Deputy Director of the Banking and Currency Supervision Department for Inspection Mr. / Compliance Department Managers at Banks.

Phone: +218 21 333 3591 - Fax: +218 21 444 1488 - Swift code: CBLJLYLX - www.cbl.gov.ly

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Central Bank of Libya
CENTRAL BANK OF LIBYA

Anti-Money Laundering and Counter-Terrorism Financing Controls for Exchange Companies and Offices

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Central Bank of Libya
Banking and Currency Supervision Department

Anti-Money Laundering and Counter-Terrorism Financing Controls for Exchange Companies and Offices

Introduction

In light of the supervisory and regulatory role exercised by the Central Bank of Libya on non-bank financial institutions and to complete the efforts made to protect the financial system and its integrity from money laundering, financing of terrorism, and other criminal activities that constitute predicate offenses to money laundering and financing of terrorism, such as financial and administrative corruption, drug and narcotic trafficking, tax evasion, human trafficking, etc., which could affect the stability of the financial sector and the national economy of the Libyan State, and in application of the provisions of the Anti-Money Laundering and Counter-Terrorism Financing Law, licensed exchange companies and offices must comply with the provisions of these controls, observe them, and implement them with precision, to achieve the desired goals in the field of combating money laundering and financing of terrorism, and to avoid the risks of these two phenomena.

Legal Basis:

1. Law No. (1) of 2005 regarding Banks and its amendments.
2. Law No. (2) of 2005 regarding Combating Money Laundering and its Executive Regulation.
3. Law No. (3) of 2014 regarding Counter-Terrorism.
4. Governor's Circular No. (1) of 2016 regarding Anti-Money Laundering and Counter-Terrorism Financing Policies.
5. Governor's Circular No. (1) of 2018 regarding Controls for Applying the Anti-Money Laundering and Counter-Terrorism Financing Law.
6. National Committee Decision No. 6 of 2018 regarding Amounts to be Disclosed upon Entry or Exit via Libyan Borders.
7. National Committee Decision No. (1) of 2019 regarding the Ceiling for Sporadic Financial Transactions.

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Central Bank of Libya
Banking and Currency Supervision Department

8. The 2023 Guide for Reporting Suspicious Transactions issued by the Unit.
9. Circular No. (06) of 2024 regarding Internal Control.
10. National Committee for Combating Money Laundering and Financing of Terrorism Circular No. 4/1325 of 2024, regarding High-Risk Country Lists (FATF).
11. Financial Intelligence Unit Circular, regarding the Guide for Identifying the Beneficial Owner of Legal Persons and Legal Arrangements.
12. General Rules and Instructions Organizing the Work of Exchange Companies and Offices issued by the Central Bank of Libya.
13. International Standards and Recommendations issued by the Financial Action Task Force (FATF), in conformity with prevailing legislation.

Licensed exchange companies and offices engaged in exchange activities must comply with the instructions organizing the combating of money laundering and financing of terrorism, as follows:

First: Definitions and Terms

For the purposes of these instructions, the following terms are intended to have the meanings indicated next to each of them, unless the context dictates otherwise:

1. The Bank: The Central Bank of Libya.
2. The Committee: The National Committee for Combating Money Laundering and Financing of Terrorism.
3. The Unit: The Libyan Financial Intelligence Unit.
4. Sanctions: Local and international sanctions issued by competent authorities.
5. The Company / Office: An exchange company or office licensed to conduct business by the Central Bank of Libya.
6. Senior Management: The Chief Executive Officer or equivalent.

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Central Bank of Libya
Banking and Currency Supervision Department

7. The Responsible Manager: The Money Laundering and Financing of Terrorism Reporting Officer.
8. The Client: Any natural or legal person dealing with an exchange company or office.
9. Money Laundering: According to Article (2) of Law No. (2) of 2005 regarding Combating Money Laundering.
10. Financing of Terrorism: According to Article No. (1) of Law No. (3) of 2014 regarding Counter-Terrorism, and Article (2) of the International Convention for the Suppression of the Financing of Terrorism of 1999.
11. Beneficial Owner: According to the Guide for Identifying the Beneficial Owner of Legal Persons and Legal Arrangements, issued by the Libyan Financial Intelligence Unit.
12. Due Diligence: The effort to identify the client's and beneficial owner's identity, verify it, and continuously monitor transactions conducted within the framework of an ongoing relationship, as well as identifying the nature of the future relationship between the financial institution, non-financial institution, or designated profession and the client and its purpose until the end of the relationship with the client.
13. Enhanced Due Diligence: Additional and stringent measures applied to high-risk clients, including verification of the source of funds and prior approval from senior management.
14. Risk-Based Approach: A supervisory approach that relies on identifying, assessing, and understanding money laundering and financing of terrorism risks and taking measures commensurate with the level of those risks.
15. Risk Analysis: The process of assessing, analyzing, classifying, and determining the impact and likelihood of potential risks.
16. Risk Assessment: The process of evaluating the potential impact of risks and their likelihood, and determining their importance and priorities.
17. Politically Exposed Persons (PEPs): Persons entrusted with or who have been entrusted with prominent public functions such as heads of state or government, senior politicians, senior government, judicial, and military officials, senior executives in state-owned companies, and senior officials in political parties.

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Central Bank of Libya
Banking and Currency Supervision Department

Second: Scope of Application

The provisions of these controls apply to all exchange companies and offices, their branches, and their employees without exception, and are applied according to a risk-based approach, achieving a balance between facilitating legitimate activity and preventing the misuse of exchange companies and offices for illegitimate purposes.

Third: Authorized Activities for Exchange Companies and Offices

• Exchange companies and offices conduct only the activities licensed by the Central Bank of Libya, and are prohibited from conducting any unauthorized banking, financial, or investment activity.
• No new activity may be added without obtaining prior written approval from the Central Bank of Libya.

Fourth: Cooperation with Regulatory Authorities

• Exchange companies and offices must fully cooperate with the Central Bank of Libya, enabling its employees to access records, systems, and documents, and provide required data within specified deadlines.

Fifth: Customer Identification Controls

1. Know Your Customer (KYC) Rules:

• Exchange companies and offices must comply with "Know Your Customer" rules, controls, and instructions issued by the Central Bank of Libya, and the provisions of applicable laws related to combating money laundering and financing of terrorism.
• Companies and offices must verify the identity of clients before executing any transaction, and apply due diligence measures commensurate with the nature, size, and risk of the transaction, and not execute any transaction if identity verification requirements or source of funds verification cannot be met, or if the beneficial owner cannot be identified.
• Exchange companies and offices must adopt a risk-based approach in applying customer due diligence procedures, classifying clients and transactions according to risk levels associated with them, documenting the basis for classification, and linking the level of due diligence to the specific nature of the risks.
• Client identity verification must include, at a minimum, full name, type and number of identification document, issuing authority, expiration date, and contact details.
• In the case of legal persons, this includes legal documents, names of authorized representatives, identification and verification of the beneficial owner.

2. Customer Due Diligence:

• Exchange companies and offices must implement due diligence measures in any case where client behavior raises suspicion requiring due diligence or enhanced due diligence measures, before commencing business with the client or during the transaction, in cases suspected of violating controls and applicable laws, including:
  o Suspicions regarding the validity or accuracy of identification data. o Unusual activity in cash transactions that are the subject of suspicion.
• Exchange companies and offices must apply enhanced due diligence procedures to high-risk clients, particularly Politically Exposed Persons (PEPs), clients from high-risk countries or regions, or those dealing in transactions of a complex or unusual nature, including:
  o Obtaining senior management approval before starting or continuing the relationship. o Enhanced verification of the source of funds. o Continuous and enhanced monitoring of related transactions.

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Central Bank of Libya
Banking and Currency Supervision Department

• Applying enhanced due diligence procedures when dealing with foreigners (legal residents or transients) as high-risk persons, and verifying proof of identity and residence documents, visa validity, and the presence of necessary disclosure documents according to Committee Decision No. 6 of 2018.

3. Identifying the Beneficial Owner

• Exchange companies and offices must take necessary measures to identify the beneficial owner of transactions or commercial relationships, verify their identity, and retain the data and supporting documents, ensuring that the company is not used as an intermediary to hide the true identity of beneficial persons, as follows:
  o If the client is a natural person: It must be determined whether the client is acting on their own behalf and for their own benefit, and they must sign a declaration stating that they are the beneficial owner of the business relationship. In case of doubts regarding the validity of the client's declaration, the natural person(s) who effectively and finally benefit from or control the business relationship, or for whose benefit or on whose behalf the transaction is conducted, or who exercise final and effective control over the client's accounts or business relationship, must be identified, and the capacity in which the client acts on behalf of the beneficial owner must be determined. o If the client is a legal person: The identity of the beneficial owner is determined through the ownership structure. The identity of natural persons who have effective controlling ownership interest in the legal person, whether directly or indirectly, must be identified, considering anyone owning 20% or more of the legal person as a beneficial owner, whether directly or indirectly. Additionally, the shareholder exercising effective control over the legal person, regardless of their shareholding percentage, whether alone or with other shareholders, must be identified.

4. Exchange companies and offices are prohibited from:

• Dealing with unidentified persons or those using fictitious or false names.

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Central Bank of Libya
Banking and Currency Supervision Department

• Entering into business relationships with unidentified entities.

5. Sanctions Lists

• Companies and offices must comply with lists approved by judicial authorities and the Central Bank of Libya, and international lists issued by the UN Security Council and United Nations (UN), the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury, the European Union (EU) lists, and the UK Treasury (HMT) lists.
• The aforementioned lists must be obtained through official links of the authorities or specific instructions.
• Companies and offices must immediately and without delay report to the Libyan Financial Intelligence Unit any transaction with a natural person or legal entity listed in the aforementioned lists.

Sixth: Responsibility in Combating Money Laundering and Financing of Terrorism

Responsibility for combating money laundering and financing of terrorism lies with the Responsible Manager of the company or office, and a replacement must be designated in their absence, with notification to the Currency Supervision Department in case of any change. The Responsible Manager or their replacement must possess all the following authorities and duties:

1. Authorities of the Responsible Manager for Combating Money Laundering and Financing of Terrorism
   The Responsible Manager must have independence in performing their duties, and the means necessary to carry them out effectively must be provided. This specifically requires:

• Not assigning any tasks that conflict with their role as the Responsible Manager for Combating Money Laundering and Financing of Terrorism.
• The right to obtain all information, access all records and documents deemed necessary for performing their duties, examine reports on unusual and suspicious transactions, and contact necessary staff to execute these duties.

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Central Bank of Libya
Banking and Currency Supervision Department

• The right to report to senior management, the board of directors, partners, or any committee derived from them, to enhance the efficiency and effectiveness of the anti-money laundering and counter-terrorism financing system.
• Referring reports required by the Central Bank of Libya related to combating money laundering and financing of terrorism.
• Ensuring complete confidentiality of all procedures for receiving and examining reports on unusual and suspicious transactions, and any notifications to competent authorities regarding them.
• The right to stop any transaction suspected of violating anti-money laundering and counter-terrorism financing provisions until the necessary examination is completed.

2. Duties of the Responsible Manager for Combating Money Laundering and Financing of Terrorism:
   The Responsible Manager or their replacement must combat money laundering and financing of terrorism commensurate with the size of the company or office, its resources, and the systems applied. Generally, they must undertake the following:

• Examine unusual transactions that the company's internal systems enable them to detect, and examine suspicious transactions received from employees or any other source, accompanied by justified reasons.
• Notify the Libyan Financial Intelligence Unit immediately and without delay regarding transactions involving suspicion of money laundering or financing of terrorism, using approved forms and within specified deadlines.
• Make decisions to retain transactions where no suspicion is found, with the decision being reasoned and recorded in the company's records.
• Propose the development and updating of anti-money laundering and counter-terrorism financing policies and procedures to enhance their effectiveness and keep pace with local and international developments.
• Supervise all company branches' compliance with relevant laws, regulatory controls, and internal systems, both administratively and operationally.
• Prepare an internal assessment of money laundering and financing of terrorism risks, update it periodically, and link assessment results to the level of due diligence applied to clients.

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Central Bank of Libya
Banking and Currency Supervision Department

• Develop training plans for employees, propose necessary training programs, and monitor their implementation.
• Prepare periodic and annual reports on anti-money laundering and counter-terrorism financing activities, present them to the board of directors for approval, and refer them to the Banking and Currency Supervision Department. These reports must include at a minimum:
  1. Efforts made regarding unusual and suspicious transactions and actions taken regarding them.
  2. Results of reviewing anti-money laundering and counter-terrorism financing systems and procedures, weaknesses, and proposals for addressing them.
  3. Amendments made to policies, systems, or procedures during the reporting period.
  4. Statement of compliance with branch supervision plan implementation.
  5. Supervision plan for the subsequent period.
  6. Detailed statement of implemented training programs.

Seventh: Responsibilities of the Board of Directors and Partners

Without prejudice to the executive responsibility of the Chief Executive Officer, the Board of Directors or Partners bear the following responsibilities:

• General supervision of the effectiveness of the anti-money laundering and counter-terrorism financing system in the company.
• Approving, reviewing, and periodically updating general policies for combating money laundering and financing of terrorism.
• Discussing periodic reports submitted by the Chief Executive Officer and taking necessary action regarding them.
• Ensuring the provision of necessary human and technical resources to implement these controls.
• Following up on regulatory observations issued by the Central Bank of Libya and taking necessary corrective measures.

Eighth: Procedures for Reporting Transactions Suspected of Being Money Laundering or Financing of Terrorism

1. The company must report all transactions suspected of involving money laundering or financing of terrorism, including attempts to conduct such transactions, regardless of their value.

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Central Bank of Libya
Banking and Currency Supervision Department

2. The report must include a detailed explanation of the reasons and grounds on which the company based its consideration of the transaction as suspicious.
3. Reporting must be done using forms approved by the Libyan Financial Intelligence Unit, immediately without delay, or through dedicated reporting systems, accompanied by all relevant data and documents.
4. Disclosure includes any transactions previously executed or attempted to be executed, where indicators of suspicion are present, regardless of their value or outcome.
5. Disclosing to the client, beneficiary, or any unauthorized party any reporting procedures or data related to them is prohibited.
6. The company must maintain an internal register of suspicion reports and decisions taken regarding them.

Ninth: Retention of Records and Documents

• The company must retain client records, transaction records, reports on unusual and suspicious transactions, training records, and internal or external transfer data, in accordance with applicable controls, for a period of no less than five years from the date of the transaction.
• Records must be stored securely, be readily retrievable, with backup copies and strict access controls provided.
• In case electronic or digital systems are used for record-keeping or transaction execution, exchange companies and offices must provide appropriate information security controls, including access rights management, protection of data from unauthorized modification or destruction, and ensuring the integrity and confidentiality of information.

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Central Bank of Libya
Banking and Currency Supervision Department

Tenth: Internal Control Systems

• The company must establish written internal systems for combating money laundering and financing of terrorism, including policies, procedures, and control mechanisms, to be approved by the Board of Directors and reviewed periodically to ensure their efficiency and effectiveness, ensuring the ability to detect unusual transactions and refer them to the Responsible Manager.
• Exchange companies and offices must establish specific controls and procedures for dealing with intermediaries or external partners, including banks, remittance companies, and entities acting on behalf of others, ensuring verification of these entities' compliance with anti-money laundering and counter-terrorism financing requirements, and documenting this within relationship files.
• Exchange companies and offices must establish internal mechanisms to protect employees who report unusual or suspicious transactions in good faith, ensuring they are not subject to arbitrary or discriminatory measures, thereby enhancing a culture of compliance and transparency within the institution.

Eleventh: Training in Combating Money Laundering and Financing of Terrorism

The company must develop and implement annual training programs for all its employees, including all branches, to raise awareness and competence, ensuring continuous access to new methods of money laundering and financing of terrorism and ways to combat them, in coordination with competent authorities.

Twelfth: Guideline Indicators for Identifying Suspicious Transactions

Identifying suspicious transactions relies on sufficient knowledge of laws and controls, practical experience, and indicators pointing to suspicion cases, including but not limited to:

• Transactions whose value or frequency is inconsistent with the client's profession or activity.
• Large or frequent transactions from clients belonging to high-risk areas.

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Central Bank of Libya
Banking and Currency Supervision Department

• Unusual interest in reporting procedures or suspicion criteria.
• Any economically unjustified transaction pattern.
• Frequent or close outgoing or incoming transfers.
• Unjustified repetition or similarity in data such as repeated phone numbers, addresses, or names.
• Repetition of the same beneficiary in transfers.
• Sudden and unjustified change in the standard of living of a company employee.
• Dealing with parties or entities from high-risk or sanctioned countries or regions.
• Repeated execution of transactions with similar amounts to split transactions.
• Frequent use of third parties without clear justification to execute transactions.
• Submission of incomplete or contradictory documents to justify transactions.

Thirteenth: Final Provisions

Exchange companies and offices must apply these controls, and their implementation is subject to the supervision and inspection of the Central Bank of Libya. Legal penalties will be applied in case of violation, including:

• Written warning or reprimand.
• Imposition of financial fines.
• Temporary suspension or reduction of transaction ceilings.
• Imposition of accompanying supervision.
• Revocation of the license to operate.
• Referral to judicial authorities.

These controls are binding on all exchange companies and offices from the date of their issuance, and companies and offices must comply with their contents and regularize their status within a period not exceeding three months from the date of issuance.