Regulation
South Africa Seeks to Enforce New Directive to Allow Crypto Firms to Share Customer Identities – BitKE
South Africa’s Financial Intelligence Center (FIC) has released a preliminary directive requiring cryptocurrency platforms in South Africa to share the identities of customers involved in cryptocurrency transactions.
The move is seen as part of South Africa’s efforts to be removed from the Financial Action Task Force (FATF) greylist, with the country aiming to comply with the “Travel Rule” established for virtual assets such as cryptocurrency.
In February 2023, the Financial Action Task Force (FATF) added both South Africa and Nigeria to its “grey list”a list of countries under special scrutiny for failing to implement standards to prevent money laundering and terrorist financing.
Nigeria 🇳🇬, South Africa 🇿🇦 FATF Gray Listed – A total of 8 African nations now under scrutiny
Interestingly, Botswana was on the FATF’s gray list before its removal in early 2022 after passing a virtual assets law to regulate cryptocurrency tradinghttps://t.co/wOOrKihLyM
— BitKE (@BitcoinKE) February 28, 2023
Under the proposed new directive, signed by FIC acting director Pieter Smit, South African cryptocurrency service providers (CASPs) would be obliged to share a significant amount of cryptocurrency senders’ personal data with recipient providers.
This data would include:
- The sender’s full name
- Identity card or passport number
- Residence address
- Date and place of birth, e
- Wallet address
Additionally, CASPs should verify information received from other providers in accordance with the FIC Act (FICA).
In cross-border transfers, senders are required to provide full names, complete information regarding the sending and receiving crypto wallets, and the name of the beneficiary. However, for transactions under R5,000 ($271.18), verifying the accuracy of these details is not mandatory unless there is suspicion of money laundering or terrorist financing.
South Africa, which has has issued more than 75 licenses to crypto companies, will also require that, before transmitting confidential customer data, CASPs:
- Identify the counterparty supplier
- Perform due diligence on the counterparty e
- Maintain up-to-date due diligence records when interacting with them
🇿🇦LIST | Here are the 75 crypto firms that have been granted the CASP license by the South African Financial Watchdog, FSCA
“So far, 374 license applications have been received. The FSCA will continue to provide regular updates as these applications are processed and approved.” – FSCA… pic.twitter.com/GnStpzogj7
— BitKE (@BitcoinKE) April 23, 2024
This measure is intended by the FIC to:
- Evaluate whether the other party can reasonably guarantee the confidentiality of the information transmitted
- Prevent engagement with illicit actors or entities as identified in a United Nations Security Council resolution
The proposal also addresses “unhosted wallet transfers,” commonly referred to as self-custody within the crypto sphere. It imposes it CASPs must establish a risk-based policy for acquiring additional information about non-hosted wallets if they identify a greater risk of money laundering, terrorist financing or proliferation financing.
Look also
“A cryptocurrency service provider that fails to comply with a provision of this Directive is non-compliant and is subject to an administrative penalty under section 45C of the FIC Act,” the Financial Intelligence Center said.
Interested parties have until May 31, 2024 to comment on the proposal.
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