Director of Community Schemes and Compliance at Van Deventer Dowlath & Marx Incorporated, Johlene Wasserman, warns that property practitioners need to be vigilant, as the Financial Intelligence Centre (FIC) cracks down on non-compliance.
The Fidelity Fund Certificate (FFC) and the Property Practitioners Regulatory Authority now expect agencies to provide immediate access during inspections to their RMCP, agency risk assessments, client due diligence files, source-of-funds checks, beneficial ownership verification, and evidence of sanctions and politically exposed person screening.
In August 2024, the Appeal Board upheld a penalty of R266,000 against Capital Point Properties, having determined that their compliance existed only on paper.
With the FIC now imposing individual sanctions of up to R7.8 million, Wasserman warns property professionals that if their systems do not operate effectively in practice, their business may risk being deemed legally unrecognised.
Wasserman said that regulators are not asking for mere promises; they are demanding proof.
If you cannot provide a timestamped audit trail during an inspection, regulators will assume that the required work was not completed.
This stricter approach gained traction following the Capital Point Properties ruling, and it reflects a growing trend towards more stringent market enforcement.
“When penalties reach this level, the message is clear: if a Risk Management Control Plan (RMCP) is not functioning effectively, it is not compliant.”
Agencies must be able to produce suspicious transaction reports, compliance registers, and training records without delay.
“Inspectors want the documents, timestamps, screening results and audit trail. If agencies can’t produce them, inspectors are likely to conclude the work was not done,” she said.
The implications of non-compliance
Wasserman said that the consequences go beyond fines, as compliance with the FIC is now closely linked to the issuance of Fidelity Fund Certificates (FFCs).
Practitioners who are unable to demonstrate that their Risk Management and Compliance Program (RMCP) is functional, that their reporting is up to date, and that their records are complete face delays or outright refusals in receiving their FFCs.
“Without an FFC, an estate agent cannot legally operate. This is the issue that every principal and agent should be watching. If FIC compliance is not in order, an FFC is at risk, and is their income,” said Wasserman.
The requirement to submit risk and compliance returns through the PPRA introduces an additional compliance risk, as incomplete, inaccurate, or missing submissions are likely to trigger separate enforcement actions.
“RCRs are not a box‑ticking exercise. They’re a declaration of your compliance status. So, whether you submit incorrect information or nothing at all, you’re telling the regulator that your systems aren’t in place.”
A compliant RMCP must be customised to demonstrate how an agency manages financial crime risk in practice.
This includes client onboarding, identity and source-of-funds verification, risk-based transaction monitoring, internal escalation, and suspicious activity reporting.
“If your RMCP isn’t being applied daily, it doesn’t meet the legal standard,” Wasserman cautions. “The FIC wants to see that your staff understand it, that your processes reflect it, and that your records prove it.”
Wasserman stated that regulators have clearly communicated their stance.
Agencies lacking a functional RMCP will face enforcement action, those without adequate records will incur financial penalties, and those failing to meet FIC obligations risk losing their FFCs.
“This is no longer about preparing for future regulation. It’s about staying legally operational. Agencies that haven’t yet implemented a functional RMCP and aligned their reporting obligations are now exposed to enforcement action,” she said.
Her advice to practitioners is to read the latest media releases from the FIC and the decisions of appeal boards, as these will offer valuable guidance on the regulator’s current approach.
She emphasised that compliance is essential; it can determine whether an agency remains in operation or faces penalties.
