Crypto Asset Service Providers (CASPs) have in the last year or so, gone from operating completely under the radar in South Africa with no registration with the FSCA (Financial Sector Conduct Authority) required, and avoiding Accountable Institution status by the Financial Intelligence Centre Act (FICA).

Now that legislation has changed to accommodate CASPs into its folds, how will the FATF (Financial Action Task Force) recently Grey-Listing South Africa impact CASPs? It is likely to put further strain on their enhanced due diligence process as required by legislation.


To recap, in November last year crypto assets were brought into the Financial Advisory and Intermediary Services Act (FAIS) and included for the first time as a financial product. To support a smooth transition into the FAIS framework, CASPs are required to apply for the relevant license between 1 June 2023 and 30 November 2023.


National Treasury has also amended Schedule 1 of FICA to include any person who performs crypto asset exchange operations and administration on behalf of a client.

Grey Listing

The potential risks and implications for CASPs are heightened as South Africa is deemed to pose a much higher risk of money laundering and terrorist financing now that we are on the Grey List, and this could mean facing the following consequences:

  • High-risk classification by the US and UK
  • Downgrade in investment grade ratings
  • Potential de-investment from current investors
  • Increased monitoring by the FATF
  • Adverse economic effects on trade and transactions
  • Correspondent banking relationship issues
  • Possible restrictions on the US, UK, and EU banks from transacting with South African banks

The FATF Grey listing is already having a negative impact within the global business sector.  Operators in global business are experiencing difficulties with international banks in transferring their clients’ funds, and CASPs based in South Africa may also experience this.

The FATF standards require countries to assess and mitigate their risks associated with virtual asset financial activities and providers by licensing or registering them. From there, it’s crucial to subject licensees and providers to supervision or monitoring by competent national authorities, such as the FSCA and the FIC.

It is envisaged that the FIC will focus on CASPs as Accountable Institutions. We expect intense scrutiny for CASPs and have already seen a questionnaire on crypto asset related activities by financial services providers being put forward, and we expect to see more enquiries over time.

Enhanced Due Diligence (EDD) must be applied to higher-risk customers of CASPs, which means obtaining detailed information about a customer, in addition to the basic Customer Due Diligence (CDD) requirements. For example, a closer look is needed to ascertain the true source of funds in a transaction.

We predict that intensive Anti-Money Laundering (AML) training will be required of CASPs so that they firstly understand their AML obligations and secondly, know what needs to be done to successfully meet the FATF recommendations. Compliance has become more of a challenge for CASPs as legislation and Grey-Listing developments mean there is nowhere left to hide.


Article by Gerry Grispos, Compliance Officer, Compli-Serve SA