Tag: Financial Intelligence Centre Act (FICA)

The South African Government, via the Department of Finance, has announced the implementation of the new General Laws Amendment Act. President Cyril Ramaphosa signed into law the General Laws (Anti Money Laundering and Combating the Financing of Terrorism) Amendment Act, 2022.

South Africa is the only permanent African member of the Financial Action Task Force (FATF), the global anti-money laundering watchdog. This is why it came as a shock to hear that the country is close to being grey-listed following concerns raised by the global body.

The South African Reserve Bank (SARB) recently announced their intention to declare cryptocurrency as a financial product, which is in line with current worldwide trends as well as the Financial Sector Conduct Authority (FSCA) which published a draft declaration of crypto assets as financial products in 2020.

The Financial Intelligence Centre (FIC) is set to include more sectors under its purview as accountable institutions while addressing gaps that may exist in the country’s anti-money laundering and counter-terrorist financing framework.

Business Email Compromise (BEC) and cyber attacks are on the increase worldwide. Conveyancing firms, their clients, and other organisations effecting many large non-recurring type transactions are particularly vulnerable to BEC fraud.

The new regulations proposed by the South African Government will lead to greater regulatory oversight and control in the crypto asset sector and will spell bad news for non-compliant operators. It has long been clear that regulation in South Africa was inevitable, regardless of this being contradictory to the philosophy of most of those involved in the crypto asset sector.

Businesses that are considered as vulnerable to being abused for money laundering and terrorist financing purposes by criminals are listed as accountable institutions in terms of the Financial Intelligence Centre Act, 38 of 2001 (FIC Act). And, as such, these institutions must meet certain regulatory obligations that are designed to help combat financial crime.

Non-compliance with anti-money laundering (AML) regulations can result in heavy financial penalties and could expose your clients and business to potential harm, with Financial Intelligence Centre Act (FICA) fines of up to R10 million in your personal capacity and up to R50 million as a company.

The Financial Intelligence Centre Act, 38 of 2001 (FIC Act), places an obligation on accountable institutions to identify clients, to keep record of transactions, to report various transactions and to take measures to promote compliance with the provisions of the FIC Act. 

Financial services providers (FSPs) registered under the Financial Advisory and Intermediary Services Act 2002 fall within the ambit of ‘accountable institutions’ under the Financial Intelligence Centre Act 2001. As accountable institutions, these FSPs are obliged to comply with the FIC Act and are subject to oversight by the FSCA.