Why KYC/AML Isn’t Just a Checkbox—It’s Your First Line of Protection

In South Africa’s fast-evolving financial landscape - where crypto assets are now classified as financial products and stablecoins are powering cross-border innovation - the demand for regulated and compliant service providers has grown exponentially. With more than 140 fintech companies across the country, it is important to select a service provider that is fully licensed and authorised.

At Fivewest, we don’t treat Know Your Customer (KYC) and Anti-Money Laundering (AML) checks as paperwork. We see them as the first line of protection - especially in a jurisdiction like South Africa, where regulation is tightening fast and enforcement is increasing.

South Africa’s Regulatory Backdrop: What You Need to Know

In 2022, the Financial Sector Conduct Authority (FSCA) declared crypto assets to be financial products, triggering the application of the FAIS Act to crypto-related service providers.

What this means:

• You must work with a licensed Financial Services Provider (FSP)

• FSPs must meet stringent KYC/AML and risk management standards

• Firms handling client funds are now under increased regulatory oversight

At FiveWest we’ve chosen the hard road - regulatory alignment - a necessary measure to ensure that our clients can move fast with clarity, confidence, and credibility.

KYC: Not Just About Compliance—About Clarity

KYC isn’t just about checking IDs and verifying addresses. It’s about understanding who the prospective partner or client is, what their financial goals are, and to keep all parties safe and aligned with regulatory standards.

For South African businesses, this matters more than ever:

• With tightening cross-border rules from the SARB and Reserve Bank reporting frameworks, transparency is non-negotiable.

• High-risk jurisdictions and flagged wallet activity can lead to bank scrutiny or account closures.

KYC is in place to function as a defense mechanism, not a burden.

AML: Protecting You from the Wrong Kind of Exposure

Working with a non-compliant provider - even unknowingly - exposes your business to:

• Regulatory fines

• Reputational damage

• Frozen assets or flagged transactions with South African banks

As an accountable institution, Fivewest reports to the FIC and follows risk-based due diligence protocols that comply with both South African law and FATF recommendations. This allows us to:

• Flag suspicious activity early

• Help you avoid counterparties with illicit funding sources

• Protect your operations from falling into legal grey zones

Local Compliance, Global Access

Whether you’re funding an offshore investment, paying an international supplier, or onboarding stablecoin liquidity for your treasury strategy - regulatory clarity is what opens doors.

With a licensed and compliant partner:

• Your crypto activity remains bank-friendly

• You can access fiat on- and off-ramps without friction

• Your business builds trust with clients, partners, and regulators

Key Licenses to look out for in South Africa

For fintechs operating in South Africa, it is paramount that the following licenses, authorisations, and mandates are held to protect their clients and align with the nation’s regulatory framework:

Financial Services Provider (FSP) License

Since crypto assets were declared “financial products” in 2022, any business offering advice or intermediary services involving crypto must be a licensed FSP under the FAIS Act.

Accountable Institution Registration with the FIC

As of 2023, crypto asset service providers (CASPs) are “accountable institutions” under South Africa’s FIC Act, meaning they must implement strict KYC, AML, and risk reporting protocols.

Authorised Dealer with Limited Authority (ADLA) License

This license allows fintechs and OTC desks to legally facilitate cross-border remittances, currency conversion, and crypto-to-fiat settlements—especially for business clients.

Exchange Control Mandate from SARB

Companies facilitating cross-border transactions must comply with South Africa’s exchange control regulations, including reporting of crypto-based international flows and adhering to annual foreign allowances.

Tax compliance and reporting to SARS

Crypto asset service providers must report certain transactional data to SARS, and fintechs must ensure VAT and income tax compliance - especially for crypto earnings, capital gains, and offshore holdings.

Final Thought

In South Africa’s financial future, compliance is not a barrier to crypto adoption - it’s the bridge.

By taking KYC/AML seriously, you’re not just avoiding fines. You’re securing your operations, gaining bank and regulatory trust, and future-proofing your digital asset strategy.