South Africa’s FIC calls for stronger KYC procedures for crypto transactions

It urges platforms using cryptocurrencies to tighten KYC protocols as criminals increasingly exploit digital assets to launder money and finance terrorism.

Johannesburg, South Africa: South Africa’s top financial crime watchdog, the Financial Intelligence Centre (FIC), is drawing a hard line in the digital sand as it called for stronger Know Your Customer (KYC) procedures for crypto transactions.

The move is aimed at shutting down a growing trend: criminal syndicates exploiting crypto for money laundering and terrorist financing.

In a newly released sector risk assessment report, published April 1, 2025, it revealed that while the number of licensed crypto firms had jumped to 258, there were at least 31 operators still flying under the radar in the country, avoiding regulatory oversight altogether. Of the firms investigated, nine were tied to serious criminal activity including child sexual abuse, terrorism and darknet transactions.

The agency reportedly said that even non-crypto criminals are now laundering funds through digital assets using increasingly sophisticated methods. These include purchasing crypto through front companies, converting it into privacy coins, and pushing it through mixers – tools designed to scramble transactions and erase their origin – before cashing out in fiat currency.

This makes it exceptionally hard for authorities to trace illicit funds, which is why the FIC is turning up the heat on exchanges.

Know your customer

KYC is no longer a compliance box to tick, it’s a critical line of defence says the FIC. Suspicious activity reports are expected when there are signs of identity obfuscation, wallets tied to multiple bank cards or sudden spikes in transaction volume, especially those structured just under legal reporting thresholds.

In a stark reminder of what’s at stake, the FIC cited the ongoing prosecution of a South African national who used Bitcoin to fund a terrorist group in 2017.

Since 2022, South Africa has brought crypto under legal scrutiny, officially classifying virtual asset service providers (VASPs) as accountable institutions. The Financial Sector Conduct Authority (FSCA) later mandated that all crypto firms secure licences, a move that saw 248 companies comply before the end of 2024.

But registration isn’t enough, the FIC warns. Only rigorous KYC systems can protect exchanges from becoming gateways to financial crime.