crypto assets are taxable<\/strong><\/a>, and trades are becoming increasingly regulated. <\/p>\n\n\n\nThe directive<\/strong><\/p>\n\n\n\nAccording to the FIC, under the directive, ordering CASPs must transmit identifying data to the receiving CASPs, concerning the originator of a qualifying transfer (ie, the sender) and the receiver (ie, beneficiary). This includes details such as:<\/p>\n\n\n\n
\n- Full name (or registered name if a legal person); <\/li>\n\n\n\n
- Identity number (if a South African citizen or resident) or passport number or foreign national identity number, and date of birth, if the originator is not a South African citizen or resident;<\/li>\n\n\n\n
- Residential (or registered) address, if such an address is readily available, or country of birth, if the residential address is not readily available; <\/li>\n\n\n\n
- The originator\u2019s distributed ledger address associated with the transfer, if the transfer is registered on a network using distributed ledger or similar technology; and<\/li>\n\n\n\n
- The originator\u2019s crypto asset account number with the ordering crypto asset service provider, if such an account is used to process the transaction, or a unique transaction reference number, if such an account number is not available.<\/li>\n<\/ul>\n\n\n\n
The ordering CASP also needs to supply information about the destination or beneficiary, including their full name, distributed ledger address, and the crypto asset account number to the receiving CASP.<\/p>\n\n\n\n
The directive puts the onus squarely on CAPS to do the due diligence on trades<\/strong> and to ensure that they do not involve bad actors\u2014if they cannot verify information, the trade should not be allowed.<\/p>\n\n\n\nWith intermediary CASPs, they must also ensure that all originator and beneficiary information that pertains to a cross-border or domestic crypto asset transfers is transmitted to the receiving CASP (or other intermediary CASP in the chain).<\/p>\n\n\n\n
A recipient CASP must also take reasonable measures to identify transfers that lack required information, which may include post-event monitoring or real-time monitoring where feasible, the FIC said.<\/p>\n\n\n\n
Transfers under R5,000<\/strong><\/p>\n\n\n\nThe FIC sets a R5,000 limit on where verification processes kick in, with caveats.<\/p>\n\n\n\n
If a transfer is a single transaction of less than R5,000, the ordering CASP still has to track the details, but won’t have to verify the information\u2014”unless there is a suspicion of money laundering or terrorist financing,” the FIC said.<\/p>\n\n\n\n
If there is a suspicion of illicit activity, the ordering CASP must verify the information pertaining to the originator, it said.<\/p>\n\n\n\n
Nevertheless, the same set of details must be transmitted, as a minimum<\/strong>:<\/p>\n\n\n\n\n- The full name of the originator and beneficiary<\/li>\n\n\n\n
- The originator\u2019s and beneficiary’s distributed ledger address associated with the transfer, if the transfer is registered on a network using distributed ledger or similar technology; and<\/li>\n\n\n\n
- The originator\u2019s and beneficiary’s crypto asset account number with the ordering and receiving CASP, if such an account is used to process the transaction, or a unique transaction reference number, if such an account is not available.<\/li>\n<\/ul>\n\n\n\n
In respect of an inward transfer that is a single transaction valued at less than R5,000 from an originator in a high-risk or other monitored jurisdiction, a recipient CASP must verify the accuracy of the beneficiary information<\/strong>.<\/p>\n\n\n\nWhat about private wallets?<\/strong><\/p>\n\n\n\nThe FIC said that all ordering and recipient CASPs must comply with the directive – and as such must develop risk-based policies and procedures for the treatment of crypto asset transfers that involve “unhosted wallets”.<\/p>\n\n\n\n
Unhosted wallets are a type of crypto wallet where the user has exclusive control of the private keys.<\/p>\n\n\n\n
Any CASP dealing with transfers from or to these wallets need to develop a process by which further information on the unhosted wallet is obtained\u2014specifically in the case where the CASP determines that there is a higher money laundering, terrorist financing or proliferation financing risk.<\/p>\n\n\n\n
The directive does not specify or dictate how this should be done, but this will be a risk factor any service provider or platform will have to determine for themselves when dealing with unhosted wallets.<\/p>\n\n\n\n
The rub is that the FIC will consider any CASP that does not comply with the directive by the date of implementation non-compliant and subject to administrative sanctions.<\/p>\n\n\n\n
The full directive can be read below:<\/p>\n\n\n\n