FIC director Xolisile Khanyile. Picture: SOWETAN/VELI NHLAPO
FIC director Xolisile Khanyile. Picture: SOWETAN/VELI NHLAPO

The use of crypto-assets for the purpose of money laundering is on the rise globally and the Financial Intelligence Centre (FIC) is working with the Reserve Bank to develop a legislative framework to regulate these activities.

In terms of the FIC Act, banks, financial institutions, estate agents and other accountable institutions have to report suspicious transactions to the FIC.

FIC executive manager for monitoring and analysis Mike Masiapato said that once a legislative framework is in place it will be obligatory to report suspicious transactions related to crypto-assets.

Masiapato told parliament’s finance committee on Wednesday that there is no legislative framework or regulation for crypto-assets in SA yet and that this is an issue regulators are seized with globally.

The Financial Action Task Force (FATF) — the international body that sets standards for measures to combat money laundering and the financing of terrorism — has urged authorities to develop mechanisms to regulate the use of crypto-assets. The FTAF will conduct an evaluation of the measures SA has in place before the end of 2019.

“There is clear evidence internationally that money laundering is moving away from conventional financial systems and regulated currencies into the crypto space,” Masiapato said. He noted that there is an increasing trend of crypto-assets being used for money laundering

“Currently, in the absence of a clear regulatory framework, we are just working with the service providers of crypto-currencies, such as Luno, so they give us reports of suspicious transactions within their own spaces related to crypto-assets.”

He noted that there is an inter-agency task force, including the FIC, Reserve Bank, Sars, the Asset Forfeiture Unit and the Hawks, that is looking at, among other things, illicit financial flows, base erosion and tax evasion. A total of eight such cases are being probed.

FIC director Xolisile Khanyile spoke about the lack of convictions in the cases the FIC reported to the various authorities and Masiapato explained that this is due to money laundering being very complicated and SA not having properly trained people to ensure convictions for these crimes.

“We are working on improving this,” he said. “We are training them on how to prosecute for money laundering.” 

ensorl@businesslive.co.za