Abstract:
Cryptocurrencies have become an increasingly popular means of
conducting financial transactions globally, and South African banking
institutions have not been immune to this trend. However, the
pseudonymous nature of cryptocurrency transactions has made it an
attractive tool for money laundering activities. In response, there is a
growing need for South African regulators to establish a legal framework to
regulate the use of cryptocurrency to combat money laundering crimes by
banking institutions. While the recent amendments to the Financial
Intelligence Centre Act 38 of 2001 (as amended) regarding
cryptocurrencies are commendable, it is not without deficiencies. The
purpose of this article is threefold. First, it examines the current state of
cryptocurrency regulation in South Africa. Second, it explores the
vulnerabilities that expose the banking system to money laundering using
cryptocurrencies. Third, it highlights the need for further development and
implementation of regulatory measures to address vulnerabilities
identified in this article. This article argues that the current lack of a
comprehensive regulatory framework for cryptocurrencies in South Africa
leaves the banking system open to potential abuse. The article suggests
that South African regulators should focus on three key areas to combat
money laundering activities related to cryptocurrency. First, regulatory
measures should be implemented to identify and verify the identities of
cryptocurrency traders and investors. Second, measures should be put in
place to monitor the flow of cryptocurrency transactions and detect
suspicious activities. Third, the digital wallets of crypto users should be
managed by South African banking institutions.
