Several top financial regulators in South Africa on Thursday published a position paper. The purpose was to establish a cryptocurrency regulatory framework. The paper has thirty recommendations that comply with the Financial Action Tasks Force sets standards. This FATF is the global money terrorist financing and laundering watchdog.
The position paper is a project by the Intergovernmental Fintech Working Group (IFWG) and intergovernmental crypto Assets Regulator Working Group in South Africa. The former consists of the Financial Intelligence Centre and the National Credit Regulator. The list also is Financial Sector Conduct Authority (FSCA), the South African Reserve Bank (SARB), and the South African Revenue Service (SARS).
The group explained that the purpose of this position paper is to provide specific recommendations for the development of a regulatory framework for crypto assets. These include suggestions on the required regulatory changes for implementation
30 Recommendations to Comply with FATF Standards
IFWG published a position paper which outlines some thirty recommendations for the cryptocurrency regulation as well as the offerings of the initial coin. The public and stakeholders were given up to 15th may submit their comments.
The recommendation number one ensures that there is compliance with the set rules by FATF. It should be as described in the crypto assets as well as crypto asset service providers of which the watchdog for money laundering published in June 2019. FATF has been actively being enforcing the standards of its member countries. CASPs includes ATMs, crypto trading platforms, toke users, custodial wallets, and derivate services providers as well as other custodial services.
“It is recommended that entities providing crypto-asset services be regarded as CASPs. Taking cognizance of the revised Recommendation 15 of the FATF recommendations on new technologies and virtual assets.”
States the policy paper.
Financial regulators in South Africa that are is central banks, their policy paper they are recommending that the crypto regulation adopted should comply with FATF set standards which include the famous travel rule.
Providers of Cryptocurrency Services
The supervisory authority of the crypto services providers will be the financial intelligence center. As an accountable institution, all CAPSs are to register with it. That way, they will comply with the requirements for AML/CFT.
The paper further explains,
“This will include conducting customer identification and verification. Further, conducting customer due diligence, keeping records, monitoring for suspicious and unusual activity on an ongoing basis. They will also be reporting to the FIC any suspicious and unusual transactions, reporting cash transactions of R25 000.00 [$1,329] and above.”
it also states that, CAPSs should implement recommendation 16 (‘the travel rule’) of the FATF Recommendations.
Other Proposals
There is also another proposal by regulators. It states that the financial sector conduct authority to be responsible for the licensing of those services that are related to the selling and buying of assets. They also propose that they should be the development of specific standards for conduct for these services.
“The policy paper further states that “The Financial Surveillance Department of the SARB should assume the supervisory. Also, regulatory responsibility for the monitoring of illegitimate cross-border financial flows in respect of crypto asset services.”
The paper also clarifies that the activities of the Cryptocurrency will face transparency in Intergovernmental Crypto Assets Regulatory Working Group. They will also remain with no legal tender status and will not at any point recognized as electronic money. It will also face restrictions in the money settlement to conduct infrastructures of the financial markets.
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