Regulation
South African agency to consider feedback on proposed cryptocurrency regulation
The news:
- The Financial Intelligence Centre (FIC), the South African agency responsible for identifying illicit proceeds, combating money laundering and terrorist financing, has received feedback from 17 commentators on its proposed regulation of cryptocurrency transactions.
- In April 2024, the FIC released a draft directive regarding the “Travel Rule” that would require crypto platforms in South Africa to identify the parties to a cryptocurrency transaction.
- Compliance with the Travel Rule is part of FIC’s efforts to remove South Africa from the Financial Action Task Force (FATF) grey list by 2025.
On February 24, 2023, the FATF placed the southern African nation on its grey list, failing to meet its 11 measures of a country’s effectiveness in combating money laundry and the financing of terrorism.
The FATF Travel Standard requires all financial institutions, including virtual assets, to provide relevant sender and beneficiary information with transactions.
The financial watchdog said it had received comments from several commentators, including leading CASPs, insurance companies, travel rule solutions providers and The Banking Association South Africa.
The agency is currently evaluating all comments and plans to consider those that are relevant to the final draft of the directive.
“The aim is to have the final directive in force by the third quarter of the financial year,” FIC added.
According to the proposed directive signed by FIC interim director Pieter Smit, all South African Cryptocurrency Service Providers (CASP) are required by law to share a significant amount of senders’ personal information with receiving CASPs.
The personal data requested includes full names, identity document numbers (for South African citizens) or passport numbers (for foreigners), residential address, date and place of birth and wallet address.
The new regulation also requires CASPs to verify all information received from other providers, in line with the FIC Act.
For single cross-border transfers of less than R5,000, the ordering cryptocurrency service provider is not required to verify the personal information provided, unless there is a suspicion of money laundering or terrorist financing.
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Among other things, receiving CASPs must comply with FICA’s “Know Your Customer” rules, which generally require them to obtain proof of identity and address when customers open an account on their platforms.
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