South Africa Advances Cryptocurrency Regulations to Meet FATF Standards

The Financial Intelligence Centre receives 17 feedbacks on proposed crypto transaction rules to combat illegal activities.

South Africa’s Financial Centre (FIC) has taken steps towards aligning its cryptocurrency rules and regulations with global standards set by the Financial Action Task Force (FATF). Following the release of the draft directive on the "Travel Rule," which requires identifying parties in bitcoin transactions, the FIC received feedback from 17 stakeholders.

The proposed regulation requires crypto asset service providers (CASPs) to share detailed personal data of senders, including full names, ID or passport numbers, residential addresses, dates and places of birth, and wallet addresses, with recipient providers. This decision is important as South Africa attempts to get removed from the greylist issued by the FAFT in February 2023 due to anti-money laundering (AML) and counter-terrorist financing CTF deficiencies.

The feedback received includes from insurance firms, travel rule solutions, and also contributions from major CASPs, according to the FIC. The comments have been evaluated by the agency to finalize the directive by the third quarter of the year.

Some major key requirements that are outlined in the proposed rules include rigorous due diligence on counterparties, verification of transaction information under the Financial Intelligence Centre Act (FICA), and monitoring of cross-border transfers. Transactions under R5,000 may be excused from some verification unless suspicions of illegal activities arise.

Moreover, the address addresses proposed concerns around "unhosted wallet transfers," highlighting a risk-based method for CASPs to gather additional information where higher money laundering risks are identified.

While most jurisdictions have now passed legislation, South Africa remains focused on improving its regulatory framework to successfully combat financial crimes. The FATF has acknowledged the country’s commitment but highlights the necessity for ongoing efforts to address strategic shortcomings.