- South Africa”s Financial Intelligence Centre (FIC) has issued a draft directive to ensure that accountable institutions that provide crypto asset services adhere to and implement the Financial Action Task Force’s (FATF) recommendations.
- The directive requires crypto asset service providers in South Africa to transmit and verify certain identity information and provide documentation when conducting a cryptocurrency transaction.
- This move is part of an effort to resolve the Financial Action Task Force’s (FATF) greylist action by adhering to the “Travel Rule” for virtual assets like cryptocurrency.
The FATF’s Travel Rule requires financial institutions, including virtual asset providers, to provide pertinent originator and beneficiary information for transactions.
Dated April 18, 2024, and signed by FIC acting director Pieter Smit, the document requires ordering, intermediary, and recipient crypto asset service providers to transmit personal information such as full name, ID or passport number, wallet address, date and place of birth, and residential address.
Among other requirements, ordering crypto asset service providers must transmit the identity of the transfer’s originator (sender) to the recipient crypto asset service provider. Intermediary providers must ensure that sender and beneficiary information relating to the transaction is transmitted to the recipient crypto asset service provider, among other requirements.
For cross-border transfers of less than R5000 from an originator in a FATF grey-listed jurisdiction, a beneficiary crypto asset service provider must verify the beneficiary.
Besides, for transactions involving “unhosted crypto wallets,” also known as self-custody wallets, CASPs are required to develop, document, and implement effective risk-based policies and procedures. The procedure specifies how additional information about the wallet will be obtained in the event of money laundering or related activity.
If any crypto asset service provider fails to comply with the directive, they will be considered non-compliant and subject to administrative sanctions.
The FATF greylisted South Africa in February 2023 for failing to implement several of its recommended measures. South Africa is not the only African country on the FATF’s grey list; others include Nigeria, Mali, Burkina Faso, Cameroon, Mozambique, South Africa, Namibia, Tanzania, and Kenya.
Meanwhile, South Africa’s Financial Sector Conduct Authority (FSCA) has confirmed a list of 75 approved institutions to operate as crypto asset service providers.
