FATF Reports: Majority of African Countries Struggle with Crypto Regulations New

• Key Highlights of FATF Fifth Review
• What is FATF’s Recommendation 15 (R15)?
• Compliance Issues on a Global Scale
• The situation of crypto regulation in Africa
• The regulatory progress in Africa
• Conclusion

The Financial Action Task Force (FATF) has released its fifth review on how effectively countries around the world are implementing crypto policies and regulations. 

Key Highlights of FATF Fifth Review

• 75% of the countries assessed by the FATF are not fully compliant with Recommendation 15 (R15), which covers rules for virtual assets and crypto establishments.

• One-third of surveyed countries have not passed laws required by the Travel Rule, which mandates that crypto establishments collect and share consumer information on transactions over certain thresholds.

• Terrorist groups, especially those in Syria and Asia, are increasingly using digital assets, with a focus on stablecoins.

What is FATF’s Recommendation 15 (R15)?

FATF’s Recommendation 15 requires countries to regulate crypto enterprises to prevent terrorist financing and money laundering. The Travel Rule, an integral part of this recommendation, requires that crypto companies gather and share user information, especially for large transactions, to help track suspicious activities.

Trending

Tanzania’s President Urges The Country’s Central Bank To Prepare For Aggressive Crypto Adoption

Compliance Issues on a Global Scale

FATF’s review highlights that many countries are still struggling to enforce regulations effectively on virtual assets and Virtual Asset Service Providers (VASPs). As a result, VASPs pose a high risk of misuse, as they are not as tightly regulated as traditional financial institutions.

The FATF works with regional bodies to ensure these standards are tailored to regional needs, making the fight against money laundering and terrorist financing both globally consistent and locally effective.

The situation of crypto regulation in Africa

Africa’s situation is particularly concerning:

• 97% of African countries surveyed are either partially compliant or non-compliant with Recommendation 15.

• 57% of the countries on FATF’s list of those requiring increased monitoring are African.

As interest in cryptocurrency grows across Africa, regulators are under pressure to draft and implement effective policies to oversee the space. It is critical for African nations to build trust and credibility in the global financial market.

The regulatory progress in Africa

South Africa is leading the way in regulating crypto. As of June 2024, it issued 138 licenses to various crypto enterprises. The country first classified crypto as a financial asset in 2022.

Nigeria is making strides as well. Nigeria has also taken a stricter approach to regulating the crypto space. For instance, Nigeria is currently involved in a legal case against Binance. 

Also, recently, Nigeria granted crypto license “Approval-in-Principle” to two indigenous crypto exchanges—Quidax and Busha Digital Limited – after rigorously assessing their compliance with Nigerian crypto policies.

Conclusion

An effective crypto regulation is crucial for combating money laundering and terrorist financing. Moreover, implementing regulations will strengthen the position of African countries in the global financial community and ensure a safer environment for cryptocurrency use.