Cryptocurrency-based real estate transactions under scrutiny in Morocco as authorities enforce stricter measures
Moroccan authorities are delving into the world of cryptocurrencies, focusing on the anonymity they provide, as investigations reveal that these transactions are occurring on decentralized exchanges with minimal Know Your Customer (KYC) requirements. This has made it challenging for Moroccan authorities to trace the origin of the funds used for property purchases, particularly abroad.
The Foreign Exchange Office of Morocco is at the helm of these investigations, which are a response to concerns about the use of cryptocurrencies to evade regulations in real estate markets. The investigation is centred around Moroccan nationals, including prominent officials often holding dual European citizenship, who are suspected of using cryptocurrencies, especially Bitcoin, to bypass real estate and financial regulations abroad. They reportedly employ foreign identities to invest in movable and immovable assets, including real estate, securities, and bank accounts in Europe, Gulf countries, and Canada. These activities violate Moroccan laws, particularly those prohibiting cryptocurrency dealings and requiring mandatory repatriation of foreign assets.
The Moroccan government is cooperating with European and Gulf regulatory bodies under Organisation for Economic Co-operation and Development (OECD) data-sharing agreements to trace and scrutinize these overseas holdings. Travel bans are anticipated to prevent suspects from fleeing as investigations continue.
Despite the ban on cryptocurrencies in Morocco since 2017 and its criminalization, crypto adoption in the country has grown steadily, making it the top recipient of crypto value in North Africa in 2022. Chainalysis rated Morocco as the second fastest-growing crypto market in Africa in 2022 and ranked it in the top 20 worldwide for crypto adoption in 2023.
The Moroccan government is also investigating possible illegal activities related to real estate purchases using cryptocurrencies. In 2023, a French national was arrested and prosecuted in Morocco for purchasing items in the country and paying with bitcoin. Suspicious real estate transactions involving Moroccan nationals in Spain and the UAE have been reported to the agency by international partners.
The investigation underscores the need for closer scrutiny of cryptocurrency transactions in real estate markets. Internationally, efforts to regulate cryptocurrency transactions and services are advancing. Europe’s MiCA regulations impose stringent licensing, anti-money laundering, and transparency requirements on crypto service providers and issuers, aiming to prevent crypto-enabled regulatory evasion. The Financial Action Task Force (FATF) continues global efforts to implement Anti-Money Laundering (AML) and counter-terrorism financing standards for virtual assets and their service providers, encouraging countries to strengthen oversight and compliance. In the US, legislation such as the CLARITY Act is progressing to clarify regulatory definitions and tax treatment of digital assets, signalling a global trend toward tighter crypto regulation.
In Morocco, the central bank began drafting a cryptocurrency regulation bill in 2022, but it has yet to be passed. The investigation into the use of cryptocurrencies by Moroccan nationals for purchasing properties abroad highlights the potential for cryptocurrencies to facilitate evasion of regulations in real estate transactions. Investigators have claimed to have identified individuals involved in these transactions, but the methods used remain undisclosed. The alleged use of cryptocurrencies by Moroccan nationals for purchasing properties abroad allows them to bypass official banking channels and required authorization.
In summary, the investigation into Moroccan nationals using cryptocurrencies to bypass real estate regulations abroad is active and coordinated with multiple countries, backed by increasing domestic and international regulatory efforts targeting crypto-related financial crimes and money laundering. The need for stricter regulations and closer scrutiny of cryptocurrency transactions in real estate markets is becoming increasingly apparent.
- The Moroccan government is working toward implementing regulations for cryptocurrencies, acknowledging the need for stricter oversight in the wake of investigation findings that suggest some Moroccan nationals are using cryptocurrencies, including Bitcoin, to bypass real estate and financial regulations abroad.
- As the investigations into the use of cryptocurrencies for real estate purchases continue, there is a growing emphasis on the importance of crypto regulation in Africa, particularly in Morocco, where the use of cryptocurrencies remains a major concern for authorities due to its potential for facilitating money laundering and regulatory evasion.
- The international regulatory community, including organizations like the Organisation for Economic Co-operation and Development (OECD), the Financial Action Task Force (FATF), and European bodies, are collaborating to address the issue of cryptocurrencies being used in the evasion of regulations, particularly in the real estate market, with efforts such as Europe’s MiCA regulations and the US's CLARITY Act aiming to improve transparency and prevent money laundering and regulatory evasion in the crypto sector.
