On 30 November 2022, the Minister of Finance added new accountable institutions to the Financial Intelligence Centre Act (“FICA”). It is prudent to comply with FICA and this new regulation as those who fail to abide by the legislation and amended regulations may face heavy fines or imprisonment.
Who will be impacted by the amendments?
The changes will significantly increase the number of sectors included as accountable institutions, this increased sectoral coverage will enhance anti-money laundering, combating the financing of terrorism and countering proliferation financing supervision and monitoring.
Schedule 3 of FICA previously listed reporting institutions (motor vehicle dealers and Kruger rand dealers) has now been deleted. The items under this schedule have been included under “high-value good dealers”. This means that businesses that sell any item that total R100 000.00 or more will be considered accountable institutions.
The FIC amendments impact all accountable institutions including Financial Service Providers, Legal Practitioners, Estate Agents, Motor Vehicle Dealers and High-Value Goods Dealers. In a step to regulate cryptocurrencies, crypto asset providers are also included in these amendments.
What is FICA?
FICA is a legal framework that helps to identify the proceeds of unlawful activities and to combat activities related to money laundering, terrorist funding and tax evasion.
What now?
Accountable institutions will now have a greater responsibility to assist South Africa to avoid greylisting. They will not just be required to perform customer due diligence but include compliance aspects such as:
- Registering with the FIC as an accountable institution;
- Maintaining and implementing a risk management and compliance programme (RMCP);
- Appoint a compliance officer;
- Training employees on FICA compliance, money laundering risk exposure and on its institutions RMCP;
- Undertake business risk assessments; and
- File regulatory reporting relating to suspicious and unusual transactions, cash transactions exceeding the prescribed threshold
Consequences of non-compliance
The FIC will focus on implementing FICA risk and compliance provisions for new sectors added to the list of accountable institutions. In respect of new sectors, the FIC and supervisory bodies do not envisage issuing financial penalties for non-compliance with FICA during the transitional 18-month period, being until May 2024.
However, future non-compliance can lead to imprisonment for a period not greater than 15 years or a fine that does not exceed R100 million.
How we can assist
Do not wait until it’s too late! Barnard Inc can assist you to ensure your organisation’s compliance and to guide you through the process. Contact us today to avoid hefty fines and/or possible imprisonment due to non-compliance.
Our compliance team is able and ready to assist you.
Article by Heike van Beek
Associate at Barnard Inc.
Email. heike@barnardinc.co.za
Mobile. 087 255 5503
