Regulation
South African agency to assess comments on proposed cryptocurrency regulation
The news:
- The Financial Intelligence Centre (FIC), South Africa’s agency tasked with identifying the proceeds of crime, combating money laundering and countering the financing of terrorism, has received comments from 17 commentators on its proposals to regulate cryptocurrency transactions.
- In April 2024, the FIC issued a draft directive regarding the “Travel Rule” that would require crypto platforms in South Africa to identify parties to a cryptocurrency transaction.
- Compliance with the travel rule is part of the 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 the grey list, failing to meet its 11 measures of a country’s effectiveness in combating terrorism. money laundering and the financing of terrorism.
The FATF Travel Rule requires all financial institutions, including virtual assets, to provide relevant sender and beneficiary information alongside transactions.
The financial watchdog revealed that it received submissions from several commentators, including major CASPs, insurance companies, travel rules solution providers and the Banking Association South Africa.
The agency is currently evaluating all comments and plans to consider relevant comments in arriving at a final version of the guidance.
“The goal is to have the final directive in place by the third quarter of the fiscal year,” FIC added.
According to the proposed directive signed by FIC Acting Director Pieter Smit, all South African Crypto Asset Service Providers (CASPs) are required by regulation to share a significant amount of senders’ personal information with receiving CASPs.
The personal data required includes full names, identity card 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 they obtain from other providers, in accordance with the FIC law.
For simple cross-border transfers of less than R5,000, the ordering crypto-asset service provider is not required to verify the personal information provided, except in cases of suspected 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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