One of South Africa’s largest cryptocurrency exchanges, Luno, has confirmed that it has started restricting customer withdrawals. The exchange insists that the borders should “act as a deterrent to illegal actors moving large sums of money within the crypto ecosystem”.
Transfers from Luno to Binance blocked
Despite this admission, however, Luno has so far refused to explain how the exchange sets the so-called “dynamic risk-based limits”. According to a report, the limits – which are separate from the sending limits on Luno’s website – were discovered by one of the exchange’s customers. The discovery became clear to the customer when their attempt to transfer crypto assets from a Luno account to a Binance wallet failed.
When asked for answers, Luno explained to the client (s) that the restrictions were in place to “protect our clients and to comply with best practices in the fight against financial crime and fraud”.
In addition, the exchange informed the customer that “the limits are dynamic and are calculated based on our overall assessment of customer risk. The limits can vary from customer to customer.” Luno informed the affected customer, however, that the exchange “does not disclose how” [the] Sending limits are calculated individually. “
Luno customers cannot influence their risk assessment
Meanwhile, the report quotes Marius Reitz, General Manager of Luno Africa, who explains why and how the broader concept of a risk-based approach is used to set the limits for each client. He said:
As part of the broader concept of a risk-based approach, which is mentioned, for example, in the Financial Intelligence Center Act (FICA), customer risk profiles are created and evaluated on the basis of a large number of different data points.
Reitz adds that while customers cannot influence their risk assessment, they can “optimize their risk position by keeping their account information up to date, enabling security features for their account and generally keeping their account secure”.
When asked about speculation that the stock exchange had started implementing these dynamic risk-based limits at the request of the financial supervisory authority (Finsurv), Reitz denied this. Instead, the general manager claims that Luno is doing this because the exchange “takes the utmost care to keep our financial crime policies as confidential as possible to ensure they remain effective.”
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