How attorneys, notaries and conveyancers can help fight crime

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The Financial Intelligence Centre Act (FIC Act) requires accountable institutions, identified in the Act to fulfil compliance obligations, which are geared to assist in identifying the proceeds of crime, combating money laundering and terrorist financing.

Accountable institutions, which includes attorneys, notaries and conveyancers are identified in the FIC Act as being vulnerable to being abused by criminals for purposes of money laundering and terrorist financing.

Dealing with sizeable financial transactions every day, attorneys, notaries and conveyancers play a significant role in driving South Africa’s economy and, they are equally important in ensuring the integrity of the financial system. In addition, the broad range of services attorneys, notaries and conveyancers offer can make them vulnerable to financial abuse.

It is therefore important that attorneys, notaries and conveyancers register with and report to the Financial Intelligence Centre (FIC). A primary objective of the FIC is to analyse the different types of reports it receives from accountable institutions to compile its financial intelligence.

As a pre-requisite for attorneys, notaries and conveyancers or other accountable institutions to begin reporting to the FIC and to contribute in the fight against crime, they first need to register with the FIC on www.fic.gov.za. Additional users can be registered as money laundering reporting officers. This functionality would depend on the complexity of the compliance function within each firm.

There are two main steps to the registration process. Firstly, if a person is a sole proprietor, they would register as an entity and use an identity number as the company registration number. Secondly, the business owner will need to appoint and register a designated compliance officer. To assist with registration, the FIC has developed easy to use registration user guides, which are published on  the FIC’s website.

Once the two-step registration process is complete, the FIC will review the registration request. If the registration is approved, the FIC will send an automated confirmation notification to the registered e-mail address.

Should the registration be rejected, the FIC will send an e-mail automated notification explaining why the registration was rejected.

ADOPTING A RISK-BASED APPROACH

The risk-based approach to onboarding of customers allows institutions, including attorneys, notaries and conveyancers, the flexibility to determine the extent of customer identity verification as well as assess and manage the money laundering and terrorist financing risk depending on the category of the customer. Institutions can vary their approach, depending on factors including; type of customer, business relationship, product or service offering, and location.

Flexibility comes with the expectation that institutions improve their understanding of the money laundering and terrorist financing risks their customers pose to their businesses and the services they offer.

It is important therefore, that the business has a good understanding of its customers i.e. their spending patterns, changes in behaviour, and identification and verification information, as this will help improve business risk management.

It is important to remember that the primary intent of money launderers is to find ways to move their proceeds through the financial system. To achieve this, they misuse various financial and non-financial instruments including purchasing shell companies and using the services of attorneys to buy into businesses to provide them a veneer of a legitimacy.

The FIC has published Public Compliance Communication (PCC) 47 which provides further guidance to attorneys, notaries and conveyancers on the continued applicability of the FIC Act, in relation to the Legal Practice Act, 2014 (Act 28 of 2014). PCC 47 is available on the FIC website along with other user manuals and guidance that will assist entities in fulfilling their obligations.


 



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