Ensuring Integrity and Responsibility: Conduct of Business and Professional Standards in Namibia’s Virtual Assets Act 10 of 2023

As Namibia steps into the future of financial services with the Virtual Assets Act 10 of 2023, the legislation places a strong emphasis on the conduct of business and the professional standards expected from license holders in the virtual asset sector.

Sections 11, 12, and 13 of the Act outline specific requirements and obligations, aiming to foster a secure, transparent, and professional virtual asset environment.

Establishing Presence: Registered Office or Place of Business

Local Presence Requirement:

Section 11(1) mandates that every license holder must have a registered office or place of business in Namibia. This requirement ensures a tangible presence within the jurisdiction, promoting accountability and regulatory oversight.

Transaction Recordkeeping:

License holders are obligated, under Section 11(2), to maintain comprehensive transaction records related to virtual asset services at their registered office or place of business. This recordkeeping requirement is crucial for regulatory scrutiny and audit purposes.

Timely Notification of Changes:

Recognizing the dynamic nature of business operations, Section 11(3) stipulates that license holders must promptly notify the Regulatory Authority of any changes in their registered office or place of business within seven days. This provision ensures that regulatory authorities are continuously informed and can adapt oversight accordingly.

Obligation to Notify: Ensuring Timely Reporting

Immediate Reporting Obligation:

Section 12(1) introduces a proactive approach by requiring officers of license holders to promptly notify the Regulatory Authority of certain events. These events include the possibility of insolvency, cyber-reporting events, non-compliance with the Act, involvement in criminal proceedings, cessation of virtual asset business activities, or significant changes to business activities.

Legal Consequences of Non-Compliance:

Failure to comply with the reporting obligations outlined in Section 12(1) carries significant consequences. Section 12(2) stipulates that contravention of these reporting requirements constitutes an offense, punishable by a fine not exceeding N$10,000,000 or imprisonment for a period not exceeding 10 years, or both.

Professional Conduct Standards: Upholding Integrity and Confidentiality

Ethical Business Practices:

Section 13(1) outlines the professional conduct expected from license holders. In carrying out virtual asset services, they must act honestly and fairly, demonstrate due care, skill, and diligence, maintain a high standard of professional conduct, and ensure appropriate measures for the protection of customers’ virtual assets.

Corporate Governance and Confidentiality:

License holders are further required, under Section 13(1), to establish effective corporate governance arrangements consistent with the Act. Additionally, Section 13(2) mandates the implementation and maintenance of measures to preserve the confidentiality of customer information, underlining the importance of data protection and privacy.

Conclusion: Upholding Virtue in Virtual Assets

Namibia’s Virtual Assets Act 10 of 2023 sets forth a robust framework to govern the conduct of business and uphold professional standards in the virtual asset sector. By requiring local presence, transparent recordkeeping, timely reporting of events, and adherence to ethical business practices, the Act aims to create an environment where virtual asset services are conducted with integrity, diligence, and a commitment to customer protection.

As the virtual asset industry continues to evolve, these provisions serve as a foundation for responsible and sustainable growth, reinforcing Namibia’s commitment to the highest standards of professionalism in the financial services sector.