The South African Reserve Bank (SARB) published the supervisory guidelines for matters related to the prevention of banks or controlling companies being used for any money laundering, terrorist financing, or other unlawful activity. The guidelines are intended to inform banks and controlling companies about practices for effective implementation of adequate anti-money laundering and counter-financing of terrorism (AML/CFT) controls in relation to crypto assets and crypto asset service providers.
Regulation 36 (17) of the Regulations for Banks (the Regulations) requires that every bank and controlling company shall have in place board approved policies and comprehensive risk-management processes and procedures with for keeping in check the AML/CFT activities with respect to crypto-assets and related service providers. These policies, processes, and procedures include comprehensive and robust know-your-customer standards that include robust customer identification, verification, and acceptance requirements throughout the banking group, contribute to the safety and soundness of the reporting bank or controlling company, and prevent the bank or controlling company from being used for any money laundering or other unlawful activity.
Further to this, Regulations 36(17)(b)(ii), 47, and 50 impose high-level requirements for banks’ corporate governance, risk management, internal controls, policies, processes, and procedures to ensure ongoing compliance with best practices on matters such as AML/CFT, reportable offences and to guard against the bank being used for purposes of financial crimes, such as financing of terrorist activities and money laundering. Regulation 38(4) of the Regulations for Banks sets out that when the Prudential Authority is of the opinion that a bank’s policies, processes, and procedures relating to its risk assessment are inadequate or its internal control systems are inadequate, the Prudential Authority may, among other things, require the bank to strengthen its risk management policies, processes or procedures, or to strengthen the internal control systems of a bank. The Guidance Note seeks to provide guidelines on certain aspects linked to the treatment of crypto-assets and crypto-asset service providers, based on the application of a thorough risk-based approach.
Keywords: Middle East And Africa, South Africa, Banking, AML CFT, Regtech, ML TF Risk, Crypto-Assets, Internal Controls, Governance, SARB
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