Luno, one of South Africa’s largest cryptocurrency exchanges, has confirmed that it has begun restricting client withdrawals. The limits, according to the exchange, are intended to “act as a deterrent for illicit actors moving large amounts of funds within the crypto ecosystem.”
Transfers from Luno to Binance are being blocked.
Despite this acknowledgement, Luno has yet to explain how the exchange establishes the so-called “dynamic risk-based limits.” The limits, which are distinct from the send limits displayed on Luno’s website, were discovered by one of the exchange’s clients, according to a report. When the client attempted to transfer crypto assets from a Luno account to a Binance wallet, the discovery became apparent.
When questioned, Luno explained to the client(s) that the limits were imposed to “protect our customers and to comply with best practices in anti-financial crime and anti-fraud.”
Furthermore, the client was informed that “the limits are dynamic in nature and are calculated based on our overall customer risk scoring; the limits may vary from customer to customer.” However, according to Luno, the exchange “does not disclose how [the] send limits are calculated on an individual level.”
Customers of Luno are unable to influence their risk score.
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 determine the limits for each client. He stated:
Customer risk profiles are designed and scored based on a variety of different data points as part of the broader concept of a risk-based approach mentioned, for example, in the Financial Intelligence Centre Act (FICA).
While customers cannot influence their risk score, they can “optimize their risk position by keeping their account information up to date, enabling safety features on their account, and generally keeping their account secure,” according to Reitz.
Reitz denied speculation that the exchange had begun implementing these dynamic risk-based limits at the request of the financial surveillance department (Finsurv). Instead, the general manager claims that Luno is acting in this manner because the exchange “takes the utmost care to keep our financial crime measures as confidential as possible in order to ensure their continued effectiveness.”