South Africa’s FIC Unveils Draft Directive for Travel Rule Implementation; Crypto Industry Leader Issues Warning

South Africa’s Financial Intelligence Centre (FIC) has released a draft directive aimed at implementing the travel rule set by the Financial Action Task Force (FATF) for crypto-asset service providers. However, leaders in South Africa’s crypto industry have raised concerns about the challenges that could hinder the successful implementation of the FATF’s Recommendation 16. Farzam Ehsani, CEO of Valr, highlighted factors such as the minimum threshold for crypto asset transfers, the regulation of interactions with unhosted wallets, and the inconsistent global implementation of the travel rule as potential obstacles. The draft directive also outlines the obligations, policies, and procedures that CASPs must adhere to when dealing with unhosted wallets. Ehsani also warned that users may face increased fees and costs as a result of the travel rule implementation, and suggested that some users could shift towards decentralized finance protocols which may be difficult to regulate. The FIC has stated that non-compliant CASPs will face administrative sanctions under the FIC Act if they fail to comply with the directive.