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.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           18

World Governance Indicator – Control of Corruption              4

Corruption presents a significant obstacle for companies doing business in Libya. All sectors in the Libyan economy suffer from widespread corruption; however, the public procurement sector and the oil industry are among the most affected. Bribery and favoritism are common practice in all sectors, and companies may struggle with unfair competition from state-owned businesses, which also dominate the local market. Corruption was rampant under Gaddafi's rule, and the situation has only worsened in the post-revolution period. The institutional framework to combat corruption is defected, and the rule of law is undermined by political instability and violence. The Libyan Constitution Drafting Assembly is still in the process of writing the constitution, resulting in all laws being derived from the Constitutional Declaration that came into force after the ousting of Gaddafi. Nonetheless, the judiciary and the security apparatus are ineffective, rendering the enforcement of the law as very weak. For further information - GAN Integrity Business Anti-Corruption Portal

Despite the high potential for domestic and foreign investment in Libya due to its reconstruction needs, unmet consumer demand, and rich natural resources, the country still faces a difficult investment environment. The Government of National Unity (GNU), which came to power in March 2021, has shown an interest in attracting more foreign investment and collaborating with foreign companies. However, the country’s foreign investment prospects remain hindered by threats from non-state militias, foreign mercenaries, and extremist and terrorist groups. Investment is also constrained by an unclear bureaucracy, complications resulting from the division of state institutions, burdensome regulations, and widespread corruption in public administration. In addition, as seen/claimed in/by X, the Libyan government has a long track record of not complying with contractual obligations and timely payments. The sectors that have historically received the most significant investment in Libya are oil and gas, electricity, and infrastructure.

Following years of civil unrest and armed conflict, Libya’s warring parties signed a ceasefire in October 2020 that paved the way for a United Nations-facilitated political process that resulted in the country’s first unified national government since 2014. Following the postponement of elections originally scheduled for December 2021, the Government of National Unity (GNU) continued to govern the country on an interim basis, although its influence was limited outside of Tripoli and certain areas in the northwest. In February 2023, UN Special Representative for the Secretary General (SRSG) Abdoulaye Bathily announced the launching of a new initiative to finalize a legal basis for elections, with the goal of holding elections by the end of 2023.

Libya holds Africa’s largest (and the world’s ninth largest) proven oil reserves and Africa’s fifth largest gas reserves.  Hydrocarbon exports contribute approximately 97 percent of government revenue.  Libya’s oil production has been making a gradual recovery from repeated attacks on oil infrastructure by ISIS-Libya and other armed groups in 2016, a nine-month forced shutdown in 2020, and a fourth-month partial shutdown in 2022. Production has reached 1.2 million barrels per day (bpd) as of March 2023.  The National Oil Corporation (NOC), an independent, apolitical institution, continues to lay the groundwork for the long-term development and stabilization of the energy sector. The Ministry of Oil and Gas has attempted to exert political control over the NOC, at times complicating matters for companies working in the sector.

The main legal framework for promoting foreign investment is the Investment Law of 2010. This law was passed before the 2011 revolution that overthrew the Gaddafi regime Yand removed many FDI restrictions and offered various incentives to stimulate private investment. No significant laws related to investment have been enacted since. There are no measures related to the pandemic or green issues that have an impact on the investment climate.

According to Transparency International and numerous well-informed local contacts, corruption is deeply rooted in Libya and is prevalent at all levels of public administration. The lack of clear and accountable mechanisms for managing oil reserves and revenues, awarding government contracts, and implementing often vague regulations continue to give government officials ample opportunities for rent-seeking and corrupt activities.

Country Links

​Central Bank of Libya