What does it mean to “regulate” virtual assets when countries ban them without imposing sanctions, assess risks without taking action, or adopt laws without enforcing them? A recent report by the Financial Action Task Force (FATF) on Recommendation 15 raises these questions particularly sharply in the African context.
The FATF’s seventh targeted update on the implementation of Recommendation 15 (R.15), concerning virtual assets (VAs) and virtual asset service providers (VASPs), provides an interesting picture to analyze for the African continent.
While some countries stand out, most African jurisdictions are struggling to turn risk assessments into credible supervisory frameworks, leaving room for illicit actors to operate.
Read also : Investment freedom in Africa: The 20 best-ranked countries in 2026
The report, based on a survey of 147 jurisdictions and 149 mutual evaluation reports, highlights modest overall progress but persistent gaps that expose Africa to major risks of money laundering, terrorist financing and proliferation financing.
An analysis by FATF style regional bodies (FSRBs) reveals striking disparities. The Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) records the poorest results.
Of the 15 jurisdictions assessed, 10 are rated “non-compliant” (NC) with R.15, four “partially compliant” (PC) and only one “largely compliant” (LC). The Task Force on Money Laundering in Central Africa (GABAC) shows an even more alarming picture: five of six jurisdictions are non-compliant, while only one is partially compliant.
Compliance with R.15 by African FSRBs
| FSRB (Regional body) | Compliant (C) | Largely compliant (LC) | Partially compliant (PC) | Non-compliant (NC) | Total assessed |
|---|---|---|---|---|---|
| GIABA (West Africa) | 0 | 1 | 4 | 10 | 15 |
| GABAC (Central Africa) | 0 | 0 | 1 | 5 | 6 |
| ESAAMLG (Eastern and Southern Africa) | 0 | 2 | 8 | 5 | 15 |
| MENAFATF (North Africa & Middle East) | 0 | 2 | 4 | 2 | 8 |
Note: GIABA has the highest rate of non-compliance (67%), while MENAFATF has the most balanced profile. No African FSRB has a jurisdiction rated “compliant.”
Source: FATF.
Eastern and Southern Africa (ESAAMLG) shows a slightly better profile, with two jurisdictions rated largely compliant, but eight partially compliant and five non-compliant. MENAFATF (North Africa and the Middle East), meanwhile, has a more balanced record, with two largely compliant, four partially compliant and two non-compliant jurisdictions.
Read also : Creative industries: Africa has the talent, but is still struggling to capture the value
This picture confirms that “jurisdictions with lower capacity struggle to implement Recommendation 15,” as the report notes. Yet a few African countries stand out. The Seychelles, which received a “largely compliant” rating in 2026, are a positive exception.
South Africa, rated largely compliant in 2024, has not only adopted the Travel Rule but also carries out inspections and enforcement measures. Nigeria, despite receiving a partially compliant rating in 2024, has established a licensing framework and conducts inspections, although it still lacks a requirement for stablecoin issuers to register.
Ineffective bans
A key concern raised by the report is the growing use of bans on virtual assets, particularly in the North Africa and Middle East region. Morocco, for example, explicitly bans VAs/VASPs and received a partially compliant rating in 2024, while the columns covering supervision, inspections and sanctions are marked “N/A” (not applicable). Ethiopia, which also has an explicit ban, received a partially compliant rating in 2021, but there is no evidence of enforcement measures.
R.15 implementation indicators for major African countries
| Country | VA/VASP risk assessment | Explicit ban | VASP licensing / registration | Stablecoin requirement | Supervisory inspections | Enforcement measures | Travel Rule adopted | R.15 rating (year) |
|---|---|---|---|---|---|---|---|---|
| Seychelles | Yes | No | Yes | No | Yes | Yes | Yes | LC (2026) |
| South Africa | Yes | No | Yes | Yes | Yes | Yes | Yes | LC (2024) |
| Nigeria | Yes | No | Yes | N/A | Yes | Yes | Yes | PC (2024) |
| Kenya | Yes | No | In progress | No | No | No | In progress | NC (2022) |
| Morocco | Yes | Yes (total) | N/A | N/A | N/A | N/A | N/A | PC (2024) |
| Ethiopia | Yes | Yes (total) | N/A | N/A | N/A | N/A | N/A | PC (2021) |
| Egypt | Yes | Yes (total) | N/A | N/A | N/A | N/A | N/A | LC (2024) |
Note: “N/A” means not applicable due to the ban or the absence of a regulatory framework.
Source: FATF.
The FATF warns: “Jurisdictions that adopt a prohibition approach have not progressed in taking supervisory or enforcement measures to sanction VASPs operating illegally in their territory.”
Read also : African Atlantic Gas Pipeline: A decade later, Morocco’s vision has West Africa on board
This creates a dangerous paradox: by banning virtual assets, these countries deprive themselves of a supervisory framework while failing to prevent illicit activity. The report notes that “reliance on prohibition frameworks, while permitted under FATF standards, can pose significant risks to the global financial system if not effectively enforced.”
In Africa, where detection and enforcement capabilities are often limited, bans become a regulatory façade that does little to disrupt criminal flows, particularly those passing through offshore virtual asset service providers (VASPs).
Kenya, a symbol of structural challenges
Kenya illustrates the difficulties of implementation. Rated non-compliant in 2022, the country has conducted a risk assessment, but its legislation on VASP registration is “in progress,” while inspections, enforcement measures and the Travel Rule are respectively marked “No,” “No” and “In progress.”
The gap between identifying risks and putting responses into practice is a recurring theme in the report. Many jurisdictions continue to struggle to translate risk assessments into effective mitigation measures. For a country such as Kenya, where cryptocurrency adoption is significant, this regulatory inertia leaves users and financial institutions increasingly vulnerable.
The report emphasizes the risks posed by offshore VASPs (oVASPs), which provide services in jurisdictions where they are neither registered nor supervised. Many African countries, lacking robust regulatory frameworks, have consequently become prime targets.
“Virtual asset service providers (crypto) operating cross border from abroad (oVASPs) actively solicit customers in jurisdictions where they are not licensed, including by advising users to circumvent regulatory requirements through VPNs,” the report states. Layered arrangements, in which oVASPs pose as retail users when dealing with licensed VASPs, make detection more difficult.
Stablecoins are another area of concern. The FATF reveals that “terrorist organizations, including ISIL and Al Qaeda, are increasingly favoring stablecoins over Bitcoin.” Yet few African jurisdictions require stablecoin issuers to register.
Nigeria, for example, is marked “N/A” in this column, as are Ethiopia and Morocco. This gap is particularly concerning because stablecoins offer fast cross border settlement and relative anonymity, which can facilitate money laundering and terrorist financing.
Read also : Morocco takes part in Africa Day celebration in New Delhi
Decentralized finance (DeFi) remains an almost complete blind spot across the continent. According to the 2026 survey, only 18% of responding jurisdictions have assessed the risks associated with DeFi arrangements, while 93% have identified no DeFi arrangement that qualifies as a VASP within their territory. In Africa, where technical resources are scarce, this lack of identification is even more pronounced.
The FATF notes that “supervisory authorities face resource and capacity constraints in developing the technical expertise required.” Peer to peer transactions through unhosted wallets are also considered high risk by 88% of jurisdictions, but only 23% collect metrics to assess their scale.
Regulatory approaches and R.15 ratings: Two Africas
| Country | Dominant approach | R.15 rating | Key strength | Major obstacle |
|---|---|---|---|---|
| Seychelles | Full regulation | LC (2026) | Effective supervision and inspections | None identified in the report |
| South Africa | Full regulation | LC (2024) | Travel Rule adopted and enforced | — |
| Nigeria | Partial regulation | PC (2024) | Operational licensing framework | Stablecoins not covered |
| Kenya | Regulation under development | NC (2022) | Risk assessment completed | Legislation and inspections lagging |
| Morocco | Total ban | PC (2024) | Risk assessment completed | No supervision possible (N/A) |
| Ethiopia | Total ban | PC (2021) | — | Lack of enforcement measures |
| Egypt | Total ban | LC (2024) | Relatively strong rating despite the ban | Supervision not applicable |
Source: FATF.
This lack of quantitative knowledge is a major problem for African countries, where informal remittances and the use of cryptocurrencies for financial inclusion are significant. Without reliable data, regulators are navigating blind, and the measures they adopt risk being either disproportionate or insufficient.
The report recommends “substantially strengthening collaboration with foreign counterparts and private sector stakeholders” to trace and seize illicit assets.
For African countries, this means relying on networks such as the Egmont Group for financial intelligence units, while also developing bilateral channels with more advanced jurisdictions.
Yet international cooperation remains a weakly fulfilled criterion in many African assessments, due to the lack of formal agreements and the slow pace of mutual legal assistance procedures.
Read also : Ethiopia officially enters race to host 2028 Africa Cup of Nations
The FATF report thus paints a picture of an Africa moving at two different speeds. On one side, countries such as the Seychelles, South Africa and Nigeria show that effective implementation is possible, even with limited resources.
On the other, a majority of jurisdictions, particularly in West and Central Africa, remain stuck with incomplete frameworks or unenforced bans. “Persistent gaps in the implementation of the Travel Rule remain a serious concern,” the FATF stresses.
For Africa, the challenge is not simply to tick regulatory boxes, but to build genuine capacity for supervision, investigation and enforcement. Otherwise, the continent will continue to be seen as a weak link, attracting illicit flows while deterring legitimate investment in the digital economy. Time is running out. Criminal actors, meanwhile, are not waiting for the next round of mutual evaluations.
