Countries/Jurisdictions of Primary Concern - Libya
Libya is in the midst of a prolonged and contested democratic transition in the wake of the 2011 revolution. The interim Tobruk/Beyda-based government faces significant challenges establishing functioning security and governance institutions, which have been compounded by the outbreak of widespread violence since mid-2014. Libya’s transition has fallen behind timelines established by a 2011 constitutional declaration that envisioned adoption of a new, to-be-drafted constitution and election of a permanent government. In addition to political conflict, armed militias, former revolutionaries, and tribes within Libya engage in criminal activity for profit, including theft, weapons trafficking, and extortion. In August 2014, the UN Security Council passed Resolution 2174, which threatens targeted sanctions against individuals and entities who undermine Libya’s stability. Sanctions remain in effect targeting specific Libyan nationals and entities such as the Libyan Investment Authority (the country’s sovereign wealth fund) and terrorist organizations such as Ansar al Sharia-Benghazi and Derna.
Libya remains heavily dependent on the hydrocarbons sector for government income – approximately 96 percent of the total revenues. Libya’s oil and gas exports dropped significantly in 2014 due to civil unrest, widening the budget deficit. Markets remain primarily cash-based, and informal value transfer networks are present.
Libya’s geographic location, porous borders, and limited law enforcement capacity make it an attractive transit point for narcotics. Libya is also a transit and destination country for migrants from sub-Saharan Africa and Egypt, whose movement across borders is facilitated by bribery of border officials, weak Libyan government border management institutions, and the de facto management of border regions by locally-based tribal networks and forces. Corruption and the perception of corruption remain serious problems.
Libya is a source, destination, and transit point for smuggled goods, including Libyan government-subsidized items such as fuel and food as well as black market and counterfeit goods from sub-Saharan Africa, Egypt, and China. Contraband smuggling includes narcotics, particularly hashish/cannabis and heroin.
Libya has made limited progress in developing a private sector and reforming its commercial banking system. The commercial banking system holds approximately $48 billion in assets, though banks are reluctant to make loans due to the lack of rules and regulations governing the lending process.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: http://www.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: NO
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: List approach
Are legal persons covered: criminally: Not available civilly: Not available
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: Not available Domestic: Not available
KYC covered entities: Banks and financial institutions licensed by the Libyan Central Bank
Number of STRs received and time frame: Not available
Number of CTRs received and time frame: Not applicable
STR covered entities: Banks and financial institutions licensed by the Libyan Central Bank
money laundering criminal Prosecutions/convictions:
Records exchange mechanism:
With U.S.: MLAT: NO Other mechanism: NO
With other governments/jurisdictions: NO
Libya is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF), a FATF-style regional body. It has not yet been the subject of a mutual evaluation.
Enforcement and implementation issues and comments:
Since the fall of the former regime in 2011, there is little information or reliable data on the scope of Libya’s AML/CFT regime, including investigations, asset forfeiture, prosecutions, and convictions. Libya has a financial intelligence unit (FIU); however, it is ineffective and not in conformance with international standards. In general, Libya lacks the capacity and resources to conduct AML awareness training and to implement countermeasures.
It is illegal to transfer funds outside of Libya without the approval of the Central Bank of Libya (CBL). Cash courier operations are in violation of Libyan law. It is estimated up to 10 percent of foreign transfers are made through illegal means, i.e., not through the CBL. Prior to the revolution, between 1.5 and 2 million foreigners were thought to live and work in Libya. That number dropped dramatically during the revolution and, presently, only an estimated 200,000 migrant workers reside in Libya. Funds transfers by migrant workers (mainly from sub-Saharan Africa and Asia) are difficult for the Libyan government to monitor.
Given the poor quality and limited reach of Libya’s banking system and Libya’s formerly socialist practices, many Libyans and foreigners rely on informal mechanisms for cash payments and transactions. According to CBL officials, the Bank is still evaluating ways in which it can encourage the informal economy to formalize business practices and use commercial financial institutions. Trade is often used to provide counter-valuation or a means of balancing the books between hawaladars.