Crescent Compliance Solutions (Pty) Ltd

South Africa’s Progress Toward FATF Greylist Removal Financial Action Task Force (FATF) - "Since February 2023, when South Africa made a high-level political commitment to work with the FATF and ESAAMLG to strengthen the effectiveness of its AML/CFT regime, South Africa has taken steps towards improving its AML/CFT regime including by demonstrating that all supervisors apply effective, proportionate, and effective sanctions, ensuring competent authorities have timely access to accurate and up to date BO information on legal persons and arrangements and applying sanctions for breaches of violation by legal persons to beneficial ownership obligations. South Africa should continue to work on implementing its action plan to address its remaining strategic deficiency on demonstrating a sustained increase in investigations and prosecutions of serious and complex money laundering and the full range of TF activities in line with its risk profile." The FATF has upgraded four of South Africa’s six outstanding action items, meaning the country has now addressed or largely addressed 20 of the 22 requirements in its Action Plan. With only two remaining items—relating to the investigation and prosecution of serious and complex money laundering and terrorist financing - South Africa is on track for potential delisting from the greylist in October 2025. This progress reflects significant regulatory and enforcement improvements, particularly in financial oversight and beneficial ownership transparency. National Treasury acknowledges the efforts of regulators and law enforcement agencies, highlighting ongoing work to fully meet FATF standards. South Africa’s ability to secure these upgrades demonstrates its commitment to strengthening its financial integrity framework, positioning it well for a return to full FATF compliance. Related links: Media Statement: https://lnkd.in/d48NRt-y Jurisdictions under Increased Monitoring - 21 February 2025: https://lnkd.in/dC_KpiwQ SA 3rd Enhanced Follow-Up Report - https://lnkd.in/gEcQkTnm Kashnie Naidoo - CSb (SA), CAMS, ACAMS SA Board Member and Regulatory Activist Charlotte Gamede Krishna Govender

FSCA DeFi Market Study: Opportunities and Risks The FSCA’s Decentralised Finance (DeFi) Market Study highlights the sector’s growth in South Africa, projecting revenue of US$2.8 million (R51.56 million) by 2025. DeFi applications use blockchain and smart contracts to facilitate lending, borrowing and trading without intermediaries. While benefits include financial inclusion, transparency and lower costs, risks such as security flaws, market manipulation and fraud remain significant, exacerbated by weak regulatory oversight. The FSCA is committed to monitoring DeFi and collaborating with stakeholders to develop frameworks that support a secure and inclusive financial system. Related link: Market Study - DeFi in South Africa: https://lnkd.in/gpP2uV32 Press Release: https://lnkd.in/gCbN-VQE Kashnie Naidoo - CSb (SA), CAMS, ACAMS SA Board Member and Regulatory Activist Charlotte Gamede Krishna Govender

#Greylisting South Africa is celebrating making its way out of the Grey....

FSCA South Africa - Requirements for Financial Institutions providing financial education initiatives: ⚡A financial institution’s financial education initiative should empower individuals and small enterprises to make informed financial decisions for themselves and those under their care. ⚡It should promote responsible financial behaviour, foster behavioural change and contribute to long-term financial skills development. Any delivery platform may be used provided it is suitable for the initiative and target audience to ensure effective outreach. ⚡The content must be objective, based on established research and methodologies, tailored to the audience’s needs and financial inclusion goals, separate from product marketing and brand-neutral though it may explain financial concepts related to specific products. Kashnie Naidoo - CSb (SA), CAMS, ACAMS SA Board Member and Regulatory Activist Charlotte Gamede Krishna Govender

#G20

Enhancing transparency in legal persons is vital to preventing financial crime. Financial institutions, designated non-financial businesses and professions, and legal entities play a key role in collecting beneficial ownership information, but maintaining accuracy is challenging, especially with complex, cross-border structures. Insufficient data hampers investigations and financial intelligence efforts. To combat these risks, the Financial Action Task Force established international standards on beneficial ownership in 2003, strengthening them in 2012 and again to address growing misuse. Recent revisions to Recommendation 24 mandate a multi-faceted approach to ensure authorities have timely access to reliable ownership data. Providing this information to financial institutions and designated non-financial businesses and professions enhances due diligence, bolstering financial integrity and crime prevention. Kashnie Naidoo - CSb (SA), CAMS, ACAMS SA Board Member and Regulatory Activist Charlotte Gamede Krishna Govender

The European Securities and Markets Authority (ESMA) has released its final set of regulatory technical standards and guidelines ahead of the full implementation of the Markets in Crypto Assets Regulation (MiCA). These measures aim to enhance market integrity, investor protection and regulatory clarity within the EU’s crypto-asset sector. The package includes standards on market abuse, outlining mechanisms for detecting and addressing misconduct, alongside a template for reporting suspected violations and coordination procedures for cross-border enforcement. Guidelines on reverse solicitation reaffirm that exemptions should be narrowly applied, ensuring firms do not bypass MiCA requirements. Suitability guidelines align crypto-asset service providers (CASPs) with MiFID II standards, requiring appropriate investment advice and decision-making. Further provisions regulate crypto-asset transfers to safeguard investors, clarify the classification of crypto-assets as financial instruments to distinguish MiCA’s scope from other regulatory frameworks and establish security protocols for entities not covered by MiCA’s broader operational resilience rules. These measures strengthen supervisory oversight, align crypto-asset regulations with traditional financial markets, and ensure a harmonised approach to emerging digital asset risks across the EU.

A comprehensive understanding of risk is fundamental to an effective anti-money laundering strategy, requiring continuous assessment of emerging threats and vulnerabilities. To achieve this, nations must adopt a structured approach that evolves with shifting financial crime patterns. A National Risk Assessment (NRA) serves as a systematic tool for evaluating exposure to illicit financial activities, enabling policymakers to calibrate regulatory responses proportionately—intensifying controls where risks are elevated and simplifying measures where risks are minimal. This guidance, informed by over 90 jurisdictions within the FATF network, provides a strategic framework for conducting an NRA. It outlines essential preparatory steps, methodologies for analysing threats, and recommendations for refining mitigation efforts. By integrating these practices, countries can enhance their financial crime defences and align their regulatory frameworks with international standards.

The Financial Intelligence Centre's (FIC’s) guidance issued under the FIC Act and MLTFC Regulations serves as the authoritative framework for compliance with anti-money laundering and counter-terrorist financing obligations in South Africa. As the only formally recognised interpretation, institutions must either adhere to this guidance or demonstrate equivalent compliance. Non-compliance may result in enforcement action; underscoring the significance of these directives in ensuring regulatory adherence. By establishing a standardised approach to compliance, the FIC’s guidance enhances regulatory consistency and reduces ambiguity in the interpretation of anti-money laundering and counter-terrorist financing requirements. This not only streamlines institutional compliance efforts but also facilitates more effective supervision by regulatory authorities. Institutions that fail to comply, risk reputational damage, financial penalties and potential legal action which could undermine stakeholder confidence and disrupt business operations. As financial crime tactics become increasingly sophisticated, ongoing adherence to the FIC’s evolving guidance is essential in safeguarding the financial sector and maintaining South Africa’s alignment with international regulatory standards. Kashnie Naidoo - CSb (SA), CAMS, ACAMS SA Board Member and Regulatory Activist Charlotte Gamede Krishna Govender

Louise de Koker's paper explores the Impact of Over-Compliance in Banking and De-Banking Practices. 'Banks must comply with the law, but sometimes they go beyond legal requirements, a practice known as over-compliance or "gold plating." While such actions can reflect good corporate citizenship and enhance trust with regulators and customers, they can also lead to unintended negative consequences. These include the diversion of compliance resources from higher-risk areas, increased costs, and limitations on sound business opportunities. In the context of money laundering, terrorist financing and proliferation financing, over-compliance can result in bank account closures, or de-banking, which may cause significant hardship for customers. This phenomenon, often driven by compliance risk decisions, has raised global regulatory concerns, including scrutiny from the Financial Action Task Force (FATF), which has focused on the negative effects of de-banking and the potential for customers to be unjustly excluded from financial services.' Related link: 'De-Risking', De-Banking and Denials of Bank Services: An Over-Compliance Dilemma? - https://lnkd.in/evEqMCpE