Crypto & Compliance In South Africa
At ChainEX we welcome regulation as we believe regulation creates a safer environment for everybody involved in crypto and further fosters an environment of certainty which takes us a step closer to the legitimisation of crypto and the increased adoption thereof within the traditional markets.
Why ChainEX considers crypto regulation essential
At ChainEX we welcome regulation as we believe regulation creates a safer environment for everybody involved in crypto and further fosters an environment of certainty which takes us a step closer to the legitimisation of crypto and the increased adoption thereof within the traditional markets.
Background around cryptocurrency regulation
Cryptocurrency continues to grow and expand globally, and with the growth and expansion so have the risks, specifically since transactions can be processed anonymously. This gives criminals and criminal organisations the opportunity to use crypto as a conduit for money laundering and terrorist financing. Due to the fact that cryptocurrency rapidly evolved and was so widely adopted, it developed without any underlying legislative frameworks to combat money-laundering and terrorist financing and as such criminals flocked to cryptocurrency to take advantage and conduct their illegal activities.
Who and what is FATF
The Financial Action Task Force (FATF) is an intergovernmental body of more than 200 counties and jurisdictions, that sets international standards that aim to prevent and combat money laundering and terrorist financing. The FATF has developed the FATF recommendations, or FATF standards, which ensure a co-ordinated global response to prevent organised crime, corruption and terrorism.
As South Africa is one of the 200 countries committed to implementing the recommendations the FATF has developed regarding cryptocurrency. We at ChainEX need to comply with our legislative obligations which include adopting a a risk based approach to monitor financial transactions and to make use of KYC procedures just like any other financial institution or cryptocurrency exchange must.
The purpose of the FATF standards and the legislative requirements as adopted within the South African jurisdiction are to ensure funds connected to terrorism and other crimes are kept away from the cryptocurrency environment and as such create a safer environment in which cryptocurrency can thrive.
The Regulations
There is a good chance that you have most probably heard, seen or even come across the acronyms AML/CTF and FICA in some part of your daily lives. The Financial Intelligence Centre Act (FICA) and other Anti-money laundering (AML) and counter-terrorism financing (CTF) legislation created obligations for Banks, Attorneys, Estate Agents, Insurance Companies to combat money laundering and the financing of terrorism and now the scope has been extended to Cryptocurrency Exchanges like ChainEX as well.
What the FICA means for ChainEX and its users?
The FICA requires a number of businesses including banks and crypto exchanges, like ChainEX to adopt a risk-based approach when establishing relationships with clients. This includes knowing who our customers are (KYC) and what their business activities are and implementing measures to prevent criminals from laundering money and financing terrorism by gaining access to our services.
In fulfilling our KYC obligations we need to collect information such as a potential client’s name, date of birth, and proof of address, the nature of any business they may be involved in and a few other details. In doing so ChainEX has included a short questionnaire that potential clients will need to complete as part of our client on-boarding process.
Conclusion
In short, it is everyone’s responsibility to act in accordance with legislation and in that way not only form part of a thriving ecosystem that is built upon innovation but also ensure the stable, safe and continued expansion of the cryptocurrency environment we so dearly love.