FATF Status
Libya is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
Libya has not yet undertaken a Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards.
US Department of State Money Laundering assessment (INCSR)
Libya was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -
Libya is not a regional or offshore financial center. In 2015, the government appointed by the Libyan House of Representatives is based in the eastern city of Bayda, while a competing, self- proclaimed, unrecognized “government” operates from Tripoli. The inability of the Libyan government to exercise control over Libya’s territory and institutions led to further degradation of Libya’s security and governance institutions and created increased opportunities for criminals to operate in Libya. 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.
Libya remains heavily dependent on the hydrocarbons sector for government income, with some estimates that over 90 percent of government income is based on oil revenues. Libya’s oil and gas exports remained well below the 1.6 million barrels per day capacity throughout all of 2015 due to the conflict and concomitant extortion by local groups, 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, whose movement across borders is facilitated by weak Libyan government border management institutions and the de facto management of border regions by locally-based tribal networks and non-government forces. Libya also is a source, destination, and transit point for smuggled goods, including government-subsidized items, such as fuel and food, as well as black market and counterfeit goods from sub-Saharan Africa, Egypt, and China. Corruption remains a serious problem.
A shortage of foreign currency led to a growth in the black market for currency trading, where the dinar was actively trading at double its official rate throughout most of 2015. The currency control regime and lack of access to foreign currency have increased money laundering in Libya. There are reports of fraudulently-invoiced foreign trade transactions. Some media reports indicated that, as of September, 139 empty port containers had arrived at the Misrata port and were indicative of money laundering; allegedly companies were using the empty containers’ associated letters of credit and fake invoices to obtain hard foreign currency at the official rate of exchange, then selling the foreign currency in the black market for double the amount of Libyan dinars. In these schemes the empty container serves as the ‘documentary evidence’ required by the customs authority to prove that goods for which foreign currency has been transferred abroad have actually arrived in Libya. The Central Bank of Libya (CBL) has accused commercial bank officials of being involved in this money laundering by issuing fake letters of credit for goods that are never actually imported.
Sanctions remain in effect targeting specific Libyan nationals and entities. UNSCR 2213 (2015) reaffirms that the travel ban and asset freeze, first imposed in 2011, also applies to individuals and entities determined by the Sanctions Committee to be engaging in or providing support for other acts that threaten the peace, stability, or security of Libya or obstruct or undermine the successful completion of its political transition. On March 19, 2014, the UN Security Council adopted Resolution 2146/2014 banning illicit crude oil exports from Libya and authorizing inspection of suspect ships on high seas. UNSCR 2213 also extends the measures imposed by this resolution.
