Consumer Information

Author:  Melanie Coetzee
Compliance and Legal Training Solutions
14 April 2021

FACING THE WRATH OF THE FINANCIAL INTELLIGENCE CENTRE – Experiencing a FIC audit is not for the faint hearted

In November 2010, the Minister of Finance extended the definition of ACCOUNTABLE INSTITUTIONS who are subject to the Financial Intelligence Centre Act and the Risk Based anti-money laundering and terrorism financing (ML/TF) obligations.
Experiencing a FIC audit is not for the faint hearted. The Financial Intelligence Centre has been very active in the last 24 months and is bullishly pursuing sub-standard Risk Assessment Processes within especially the banking sector, the legal industry and the property industry in its attempt to ensure continued legitimate foreign investment and to stop money laundering through criminal activities into and out of South Africa. It is worth noting that property transactions is seen as high risk because of the amounts involved and since South Africa is situated close to war torn countries, the risks of terrorism funding is real.

In terms of FICA and the recent amendment to the Act in April 2019, Accountable Institutions are obliged to:
• Develop and Implement a Risk Management and Compliance Programme
• Develop a proper Risk Assessment process in order to assist the Financial Intelligence Centre identify suspicious transactions and clients with high ML/TF risk;
• Delegate the overall function to a Compliance and Reporting Officer who has reporting and training responsibilities;
• Screen clients against the Targeted Financial Sanctions international list and provide proof of the screening results.

Here is a list of most identifiable defined Accountable Institutions:
1. An ATTORNEY who practices as defined in section 1 of the Attorneys Act, 1979 (Act 53 of 1979).
2. A BOARD OF EXECUTORS or A TRUST COMPANY or any other person that invests, keeps in safe custody, controls or administers trust property within the meaning of the Trust Property Control Act, 1988 (Act 57 of 1988).
3. An ESTATE AGENT as defined in the Estate [Agents] Agency Affairs Act 1976 (Act 112 of 1976).
4. A person who carries on the ‘BUSINESS OF A BANK’ as defined in the Banks Act, 1990 (Act 94 of 1990).
5. A person who carries on a ‘LONG TERM INSURANCE’ as defined in the Long-Term Insurance Act, 1998 (Act 52 of 1998) [including an insurance broker and an agent of an insurer].
6. A person who carries on the business of DEALING IN FOREIGN EXCHANGE.

Steep administrative penalties can be imposed by the industry Regulator or the Financial Intelligence Centre itself, which penalties could affect small to medium sized businesses unnecessarily.

Do yourself and your business a favour and appoint a specialist to assist you with the REVIEW and UPDATE of your RMCP and risk assessment processes.

Our organisation will help your Compliance and Reporting Officer to register on the FIC online reporting platform and support you with determining what and who needs to be reported and when.

The original article can be viewed here:

Our organisation [MC] will help your Compliance and Reporting Officer to register on the FIC online reporting platform and support you with determining what and who needs to be reported and when.

Contact us at:  compliance@melaniecoetzee.co.za

Here are some published notices of recent administrative sanctions issued which make for very interesting reading