South Africa’s apex bank has mandated all financial institutions in the country to extend their banking services to crypto users. The central bank issues the directive in a guide released on its official handle and made available to concerned finance companies. In the guide, the South African Reserve Bank (SARB) cautions the institutions against banning crypto transactions on their respective networks.
Occasioned by the increasing adoption of cryptos, SARB believes financial firms must now align to serve crypto customers. However, the apex bank in the guide wants the financial institutions to observe due diligence in dealing with those clients fully.
SARB discovered that some financial firms in South Africa had abruptly decided to shut down their customers’ accounts, indulging in crypto transactions. In their various justifications, the apex bank added that those financial institutions had cited the lack of consistent crypto regulation as the reason behind their decision. The financial firms see cryptos as an instrument aiding financial criminality across the globe.
Reacting to the decision, the SARB noted that “banks may act as a conduit for funds linked to crypto asset service providers activity and may play a role in customers wishing to purchase crypto assets or receive pay-outs for the sale of crypto assets via fiat currency into their bank accounts. Banks must ensure that they maintain adequate records for all customer transactions, including fiat-to-fiat, fiat-to-crypto, and crypto-to-fiat transactions.”
Additionally, the South African Reserve Bank admonished financial institutions to deploy anti-money laundering and counterterrorism financing mechanisms to tame every illegal use of crypto transactions.
The bank acknowledged the growing risks associated with cryptos. However, SARB emphasized the need for banks to conduct adequate risk assessments rather than avoid risks. According to the guide, these firms must understand and identify the drivers of the risks in crypto transactions. This, as revealed, includes ascertaining the actual pedigree of a CASP’s customer, their transactional records, and cross-border fund circulation. SARB is optimistic that banks can easily ascertain this by embracing emerging technologies.
SARB said it is always open to intervening in financial institutions with inadequate risk assessment mechanisms. According to the apex bank, its intervention will encourage the involved financial firms to improve their respective policies, procedures, processes, or internal mechanisms.
More so, it warned financial institutions in the country against concealing suspected money laundering cases with cryptos. The South African Reserve Bank wants the firms to immediately report to the financial intelligence center whenever they suspect illicit crypto transactions on their network.
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Source: https://insidebitcoins.com/news/sarb-directs-financial-institutions-to-serve-crypto-clients