Unveiling South Africa's Cryptocurrency Enforcement Initiatives
South Africa's Financial Intelligence Centre (FIC) is taking a proactive approach to combat crypto crime, emphasising the importance of stringent compliance with the Financial Intelligence Centre Act (FICA) for all accountable institutions, including those handling virtual assets [1].
The FIC has advised that virtual asset service providers (VASPs) must implement robust measures to prevent criminals from exploiting their services. While the specific detailed regulations are still evolving, the approach involves requiring VASPs to implement risk-based internal controls, conduct thorough customer due diligence (including verifying client identities continuously), and monitor transactions vigilantly to detect suspicious activities [4][1]. These measures align with the global standards set by the Financial Action Task Force (FATF) and are part of South Africa’s compliance with international anti-money laundering (AML) and counter-terrorist financing frameworks [1][3].
The FIC is urging crypto exchanges to implement strong Know Your Customer (KYC) procedures and to match transactions to the identities of those initiating them. This is crucial to prevent the illicit use of cryptocurrencies for money laundering and other financial crimes [1].
In addition to these measures, the broader financial crime prevention ecosystem in South Africa is moving towards integrating advanced technologies such as AI, predictive analytics, and blockchain transparency to enhance detection of illicit patterns in virtual asset transactions [2].
The ongoing engagement at industry conferences such as the AML & Financial Crime Southern Africa Conference 2025 reflects the commitment to sharing best practices and regulatory updates relevant to virtual assets, further supporting VASPs in strengthening their defenses against criminal exploitation [5].
Meanwhile, other financial institutions in South Africa are also embracing the potential of blockchain technology. Nedbank, a traditional South African finance institution, plans to debut smart contract applications within the next 12 months to demonstrate its blockchain capabilities. Smart contracts could help Nedbank fast-track the credit financing process, making it easier for borrowers to receive loans as soon as the preconditions are met. Additionally, Corbus de Bruyn, head of client value proposition at Nedbank, believes smart contracts could revolutionise farming operations by automating imports, exports, and trade processes [6].
Elsewhere, Absa CIB has already implemented blockchain for digitizing letters of credit. The FIC's report found that many crypto platforms are not equipped to detect criminal activity, but the adoption of advanced technologies like smart contracts by institutions like Nedbank could help address this issue [3].
In Kenya, the government is drafting regulations for VASPs after previously adopting a "see no evil" approach to cryptocurrencies. The Virtual Assets Service Providers (VASP) Bill 2025 aims to bring Kenyan crypto exchanges under the regulatory purview of the Kenyan Capital Markets Association and the Central Bank of Kenya. Under the bill, crypto exchanges will be required to get licensed, open physical offices, implement anti-money laundering checks, collect user information, and share it with authorities when required [7].
The FIC's efforts are not limited to South Africa. In Q1 2025, the Human Rights Foundation granted four African projects, and initiatives like Bybit Academy via AltSchool Africa and Mento Labs's Global Stablecoin Hackathon are currently open for sign-ups, further promoting the adoption and regulation of cryptocurrencies across the continent [8].
References:
- https://www.fin24.com/Tech/News/south-africa-s-financial-intelligence-centre-issues-warning-to-crypto-exchanges-20220126
- https://www.itweb.co.za/content/C78KZPfq9fKP4kp
- https://www.itweb.co.za/content/nY6u3B7gwWJ5Y3l
- https://www.itweb.co.za/content/DKp9Fd6BJE6g9Rc
- https://www.itweb.co.za/content/3j0LKpV7eT0JzvT
- https://www.itweb.co.za/content/DKp9Fd6BJE6g9Rc
- https://www.itweb.co.za/content/C78KZPfq9fKP4kp
- https://www.itweb.co.za/content/C78KZPfq9fKP4kp
- South Africa's Financial Intelligence Centre (FIC) is urging crypto exchanges to implement robust Know Your Customer (KYC) procedures, as part of their strategy to combat crypto crime.
- Virtual asset service providers (VASPs) in South Africa are being advised to implement risk-based internal controls, conduct thorough customer due diligence, and monitor transactions vigilantly to detect suspicious activities.
- The FIC's approach aligns with the global standards set by the Financial Action Task Force (FATF) and is part of South Africa’s compliance with international anti-money laundering (AML) and counter-terrorist financing frameworks.
- In addition to these measures, the broader financial crime prevention ecosystem in South Africa is integrating advanced technologies like AI, predictive analytics, and blockchain transparency to enhance detection of illicit patterns in virtual asset transactions.
- Nedbank, a traditional South African finance institution, plans to debut smart contract applications within the next 12 months, aiming to fast-track the credit financing process and revolutionize farming operations.
- Absa CIB has already implemented blockchain for digitizing letters of credit, while many crypto platforms in Kenya are now starting to come under regulatory purview due to the drafting of the Virtual Assets Service Providers (VASP) Bill 2025.
- The FIC's efforts are not limited to South Africa, with initiatives like Bybit Academy via AltSchool Africa and Mento Labs's Global Stablecoin Hackathon currently open for sign-ups, further promoting the adoption and regulation of cryptocurrencies across Africa.
