South Africa implements FATF Travel Rule for digital assets
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The Financial Action Task Force's (FATF) Travel Rule for digital currency has taken effect in South Africa, ushering in a new era of transparency in the country's digital assets sector.
The Financial Intelligence Center (FIC) published Directive 9 in November 2024, notifying all VASPs that the Travel Rule would take effect on April 30. Under the Rule, VASPs must collect the originator and beneficiary information, including their full names, ID or passport numbers (if they are South African or foreigners, respectively), dates of birth and residential addresses. Transaction details such as amount, date and the unique transaction ID must also be included.
The Travel Rule applies to all transaction sizes. However, some of the requirements are simplified for transactions below R5,000 ($270).
The rule further requires VASPs to monitor and report any suspicious transactions. All the collected data must be stored for at least five years and made available to authorities upon request.
South African VASPs have taken measures to comply with the new regulations, with violations punishable by fines and license revocations. Binance announced two weeks ago that it would require transaction information from its users, with violators risking unprocessed transactions.
Others, like homegrown exchanges Luno and VALR, have made similar announcements. Luno told its users that the Travel Rule will allow VASPs to adhere to the same standards as their legacy finance peers. 'If this sounds kind of familiar, the Travel Rule has applied to financial institutions like banks for over twenty years. Banks use the SWIFT system to interact with one another for this purpose,' Luno stated.
VALR has also reminded users to provide counterparty details since mid-April in preparation for the new standard. The exchange has partnered with London-based identity service provider Sumsub to comply with the rule.
As hundreds of VASPs scramble to comply with the new standard, Bitcoin wallet Centbee has been ready for years. Co-founder Angus Brown told CoinGeek three years ago that this had been the norm for the previous 12 months.
'We have been treating it as if it's applicable in our business for the last year. So, we are doing all the things we're supposed to do and are compliant already,' he stated.
However, others have expressed concerns, particularly over the low reporting threshold of $270. Sean Sanders, whose company, Altify, offers simple 'crypto' investment products, says it's one of the lowest thresholds globally.
'This will place extra compliance costs on investment platforms like ours, which may result in slower transaction processing times and an overall worse user experience for our users relative to platforms operating outside of South Africa,' he told a local outlet.
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