Sameer Kumandan | Managing Director | SearchWorks | mail me |
The 2025 Budget Speech, delivered on 12 March 2025, made it clear that financial crime enforcement and compliance are priorities.
The government has allocated increased funding for forensic investigations, regulatory oversight and tax compliance monitoring. As a result, businesses under Financial Intelligence Centre Act (FICA) must prepare for greater scrutiny and stricter enforcement.
Here’s what the budget announcements mean for accountable institutions, including banks, microlenders, legal firms, real estate professionals and crypto platforms.
More resources for FICA compliance
The government allocated additional funding to strengthen financial forensic investigations. This aims to improve prosecution of complex economic crimes. It includes measures to enhance anti-money laundering (AML) and counter-terrorism financing (CTF) efforts. These efforts align with Financial Action Task Force (FATF) recommendations.
What this means for accountable institutions
Expect more audits and FICA compliance checks from regulators. These include the Financial Intelligence Centre (FIC), South African Reserve Bank (SARB) and Financial Sector Conduct Authority (FSCA).
Failure to meet FICA obligations will likely result in swifter enforcement actions and penalties. Obligations such as customer due diligence and suspicious transaction reporting are now under increased scrutiny.
Regulatory oversight and FICA compliance
The South African Revenue Service (SARS) has identified 156,000 businesses that are unregistered. These businesses have also failed to file tax returns despite significant economic activity. The crackdown on tax non-compliance coincides with financial crime investigations. This signals a tighter grip on regulatory enforcement across multiple agencies.
What this means for accountable institutions
Unregistered businesses that engage in financial transactions will face severe penalties. This includes informal lenders under increasing regulatory scrutiny.
With SARS intensifying tax compliance investigations, FICA compliance data will be cross-referenced. This will help detect financial irregularities, unreported income, and potential money laundering activities.
As enforcement efforts ramp up, lenders and financial institutions must ensure accurate, timely transaction reporting. They must align fully with FICA requirements to avoid fines, reputational damage, or operational restrictions.
Higher cost of non-compliance
With more resources dedicated to financial oversight, the cost of FICA non-compliance will rise. Currently, non-compliance with FICA carries severe financial penalties. Fines can reach up to R10 million for individuals. Businesses can face fines of up to R50 million for failing to meet regulatory obligations.
Repeat offenders face business restrictions or even license suspensions. These actions can severely disrupt operations and erode client trust. In more serious cases, criminal prosecution is a real possibility. Penalties include imprisonment of up to 15 years for facilitating financial crime or failing to report suspicious activities.
What this means for accountable institutions
Regulators are expected to enforce tougher penalties on institutions that do not register with the FIC. Penalties will also target those failing to implement proper risk controls or neglecting their reporting obligations. With enforcement efforts ramping up, businesses must prioritise compliance now.
Implementing real-time transaction monitoring, automated risk assessments and robust due diligence measures is critical. These actions will help avoid financial penalties, reputational damage, and regulatory action.
VAT increase and its impact on FICA compliance
The 2025 Budget Speech announced a Value Added Tax (VAT) increase. The VAT rate will rise to 16% by 2026. This decision aims to fund critical government services. It helps avoid deeper cuts to public spending.
What this means for accountable institutions
The VAT increase will raise operational costs for businesses offering financial services. This includes banks, lenders and credit providers. They will navigate rising compliance expenses alongside taxation.
Financial institutions may pass on the additional tax burden to clients. This will lead to higher costs for compliance-related services. These services include risk assessments, transaction monitoring, and due diligence. At the same time, SARS is intensifying scrutiny on VAT compliance and financial reporting.
The goal is to close revenue gaps and ensure businesses meet their tax and regulatory obligations.
