97% of African Nations Struggle to Comply with Cryptocurrency Regulations: FATF

Politics

Jul 11, 2024 at 3:29 PM

Updated: Jul 11, 2024 at 5:04 PM

2 minute read

The latest FATF review also reveals that 75% of jurisdictions globally are not compliant with cryptocurrency regulations.

Resources: Freepik; FATF | Design by Ifeoluwa Awowoye

The Financial Action Task Force (FATF) has published its fifth targeted review of the implementation of cryptocurrency regulations globally, revealing that despite progress made, overall compliance still lags behind traditional financial sectors.

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The facts in brief

• 75% of the assessed jurisdictions are still partially or non-compliant with Recommendation 15 (R 15) on virtual activities.
• Nearly a third of the jurisdictions surveyed have not passed Travel Rule legislation.
• Terrorist groups, particularly in Syria and Asia, are increasingly using virtual assets, often favoring stablecoins.

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Be smart: FATF Recommendation 15 requires countries to regulate cryptocurrency companies for anti-money laundering and countering the financing of terrorism (AML/CFT) purposes. The Travel Rule requires cryptocurrency companies to collect and share customer information for transactions above a certain threshold.

What are they saying?

“A continued lack of implementation of relevant FATF standards globally means that VAs and VASPs remain vulnerable to misuse and overall implementation of the standards lags behind other financial sectors.”

Zoom in

The report also provides insights into the implementation of R 15 in various FATF-style regional bodies (FSRBs).

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Be smart: The FSRBs are independent bodies that work with the FATF to combat money laundering and terrorist financing worldwide. The FATF sets global standards, while the FSRBs adapt and implement those standards at the regional level. This partnership ensures that AML/CFT efforts are both global in scope and tailored to regional needs and contexts.

For Africa, The report shows that around 97% of the countries surveyed are only partially compliant or non-compliant with Recommendation 15.

Because matter

Effective regulation is essential to mitigate the money laundering and terrorist financing risks associated with cryptocurrencies.

Zoom Out

As cryptocurrency adoption continues to grow in Africa, regulators are facing increasing pressure to implement effective oversight.

• Currently, South Africa is the only African economy with significant crypto activity to have a relatively advanced digital asset regulatory regime.
• The country initially declared cryptocurrencies as a financial product in 2022.
• As of June 30, 2024, South Africa has granted 138 crypto licenses.
• Although Nigeria released a cryptocurrency regulation in 2022, it still does not have a clear licensing regime in place. More recently, it has adopted the regulation-by-enforcement approach, with the country currently in a Legal battle with cryptocurrency exchange Binance.

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