WHAT IS MEANT BY THE TERM ‘CRYPTO ASSET SERVICE PROVIDER’? FIC ISSUES COMMUNICATION TO EXPLAIN

WHAT IS MEANT BY THE TERM ‘CRYPTO ASSET SERVICE PROVIDER’? FIC ISSUES COMMUNICATION TO EXPLAIN

• 04 July 2023
• Financial Sector
• SA Legal Academy

The Financial Intelligence Centre (FIC) has issued a communication (57) on interpreting what is meant by the term ‘crypto asset service provider’, which is listed as Item 22 of the amended Schedule 1 to the FIC Act, 2001 (accountable institutions).

As an accompanying notice confirms, the amended Schedule 1 was gazetted on 29 November 2022 and came into effect on 19 December 2022.

Noting the vulnerability of crypto assets to criminal abuse, Communication 57 ascribes this to various factors, including:

• the ‘pseudonymous nature’ of crypto asset ownership
• the ‘non-face-to-face manner’ in which crypto asset transactions occur, often across borders, and
• the extent to which crypto assets enable anonymous cash or third-party funding ‘through crypto currency exchanges that do not identify the funding source’.

With that in mind, it defines ‘crypto asset service provider’ and unpacks some of the terms used in that definition, providing examples.

Communication 57 also outlines compliance obligations, with reference to FIC Directive 5/2019 (read with Communication 45 on automated transaction monitoring systems), and Directive 7/2023 (submitting risk and compliance returns).

Please click the links below for more information:

• FIC note on Communication 57
• Communication 57 (interpreting what is meant by ‘crypto asset service provider’)
• Directive 5/2019
• Communication 45
• Directive 7/2023

Published by SA Legal Academy Policy Watch

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