South Africa’s FIC Warns Crypto Exchanges to Strengthen Defenses Against Criminal Exploitation

South Africa’s Financial Intelligence Center (FIC) warns the licensed crypto exchanges in the country to put more measures in place as defences against criminal perpetrators using the crypto space.

The South African financial watchdog alerted crypto assets service providers (CASPs) to the inconspicuous tactics deployed by criminals to launder their proceeds from criminal activities and fund terrorism.

In an April 1st 2025 report on the assessment of money laundering and terrorism financing risks, the FIC stated that the international anti-money laundering and combating terrorist financing community identified the CASP sector as one of the sectors that are vulnerable conduits for money laundering and terrorism financing.

The FIC added that the bad actors are using several tricks that are hard for the crypto assets service providers (CASPs) to detect, let alone report.

Furthermore, the agency highlighted that money launderers and terrorism financiers purchase assets using fake legal intermediaries and quickly convert the assets into cryptocurrencies.

Then, those coins are exchanged for fiat currencies using mixers, tumblers or other anonymity-enhancing services to obscure the origins and destinations of the funds, making it harder to trace the flow of the currencies.

South Africa Flags Lack of Reliable Crypto Payment Data as Risk Assessment Challenge

According to the report, the FIC lamented that the scarcity of reliable and publicly accessible statistics on crypto assets transactions by payment service providers, participants, merchants and consumers in South Africa has made it difficult to properly access the risks posed by the crypto industry.

Nonetheless, the agency stated that:

“A 2022 study by Triple A (a Singapore Blockchain company) indicates that over 5.8 million people in South Africa, 9.44 percent of South Africa’s total population, at that stage owned crypto assets, with 43 percent of the population expected to be using them by 2030.”

The agency further expressed that, though, the actual owners of crypto assets might be more than that as more people are embracing the use of the assets for different purposes daily.

Notably, since December 19 2022, when the FIC requested that all CASPs fulfil FIC Act compliance obligations, which included registration and regulatory reporting to the FIC, 256 CASPs have registered as of 10th of February 2025.

However, the agency noted that the number may not reflect the actual size of CASPs operating in the country as there are reports of institutions operating without due registration.

Furthermore, the FIC wants the exchanges to rapidly report suspicious transactions on their platforms. Also, the exchanges must flag deposits from mixing services, and platforms without AlM/CFT assessments.

Conclusively, large deposits from multiple wallets should also get to the notice of the agency.

Kenya’s 2025 VASPs Bill Moves to Regulate Crypto Market, Ban Mixers, and Enforce Licensing

In a similar objective, Kenya, in an attempt to purge the country of money laundering and terrorism financing accusations, enacted a bill which enforced licencing for the crypto exchanges and building of physical offices in the country.

📢 UPDATE: KENYA INTRODUCES VASP BILL 2025 TO REGULATE CRYPTO MARKET AND BOOST OVERSIGHT OF DIGITAL ASSET SERVICES.

— Coinwaft (@coinwaft) April 9, 2025

It further banned the use of anonymity-enhancing tools and called for transparency in transactions. In addition, the bill proposed monetary fines, imprisonment, or both for defaulters.