New Directive Targets Crypto Transactions
South Africa is tightening its grip on cryptocurrency transactions with the introduction of Directive 9 by the Financial Intelligence Centre (FIC). The directive mandates that all cryptocurrency platforms identify the parties involved in every transaction, marking a significant step in aligning the country with international anti-money laundering standards as it faces a rapidly growing crypto industry.
This move aims to comply with the Financial Action Task Force’s (FATF) “travel rule,” a global regulation requiring detailed record-keeping of cryptocurrency transfers. The ultimate goal? To lift South Africa off FATF’s greylist and restore its standing in global financial markets.
What is the Travel Rule?
The travel rule requires crypto asset service providers (CASPs) to transmit and securely store identifying information about the originator and beneficiary of crypto transactions. This data must be accessible to authorities on request and is designed to combat money laundering, terrorism financing, and other illicit activities.
“The primary purpose for implementing the travel rule is to help ensure that the transfer or receipt of crypto assets via CASPs is not used for money laundering, terrorist financing, and proliferation financing purposes,” the FIC stated.
Directive 9 takes effect on 30 April 2025 and applies to both local and cross-border cryptocurrency transactions.
Key Requirements for Crypto Platforms
Under the directive, CASPs must collect specific data based on transaction values:
- Transactions below R5,000: Platforms must record the sender and beneficiary’s full names, crypto wallet addresses, and account numbers.
- Transactions exceeding R5,000: Additional details are required, including ID or passport numbers, residential addresses, and registration information for businesses.
Intermediary CASPs must ensure that all this data is passed along securely throughout the transaction chain, while recipient CASPs must verify the information and flag suspicious transactions.
The directive also addresses private, unhosted wallets. CASPs are now required to develop risk-based policies to handle these wallets, especially when there’s a heightened risk of money laundering or terrorist financing.
Industry Reactions: Mixed Feelings
The introduction of Directive 9 has elicited a mix of support and concern from industry leaders.
Altify founder and CEO Sean Sanders acknowledged the inevitability of the travel rule, given South Africa’s greylisting by FATF in February 2023. However, he expressed surprise at the low reporting threshold of R5,000 (~$270), noting that it’s significantly stricter than thresholds in other countries:
- Japan: ~$3,000
- Singapore: ~$1,115
- Canada: ~$710
“This will place extra compliance costs on investment platforms like us at Altify, which may result in slower transaction processing times and an overall worse user experience compared to platforms operating outside of South Africa,” Sanders warned.
Sanders also pointed out the inconsistency between crypto reporting thresholds and those for cash transactions in South Africa, arguing for alignment to avoid unnecessary complications.
A Step Toward Compliance
South Africa’s adoption of Directive 9 marks a pivotal step in aligning with global standards for cryptocurrency regulation. By enforcing the travel rule, the country aims to combat financial crimes, enhance transparency, and pave the way toward removal from the FATF greylist.
This directive doesn’t just impact cryptocurrency service providers—it directly affects betting sites in South Africa that accept crypto payments. These sites must now navigate stricter compliance measures, balancing user experience with regulatory demands. While the added oversight presents challenges, it also offers an opportunity for betting platforms to enhance trust and accountability in the gaming sector, contributing to a more secure and transparent digital financial ecosystem.
