Financial crime such as money laundering, terrorist financing and proliferation financing (ML, TF and PF) harm businesses and impact the broader economy negatively.
To protect the integrity of South Africa’s financial system, the Financial Intelligence Centre Act (FIC Act) imposes anti-money laundering, combating the financing of terrorism and combating the financing of proliferation (AML, CFT and CFP) obligations on certain business sectors and professions.
These sectors and professions are listed as accountable institutions in Schedule 1 of the FIC Act, and include legal practitioners, high value good dealers, estate agents, credit providers, trust and company service providers, and gambling entities.
Among the compliance obligations is the requirement to file regulatory reports to the Financial Intelligence Centre (FIC).
One of the primary functions of the FIC is to produce financial intelligence from the analysis of regulatory reports and other data it receives from accountable institutions and businesses.
The financial intelligence is used by competent authorities in their investigations, prosecutions and applications for asset forfeiture.
Registration with the FIC
All accountable institutions listed in Schedule 1 to the FIC Act must register with the FIC which is the first step before they can fulfil other compliance requirements.
Registration with the FIC is free and must be completed electronically on the reporting platform.
All registrations must be accompanied by supporting documentation including certified identity documents of the compliance officer and an authorisation letter on the entity’s letterhead.
Refer to the goAML registration guide for accountable institutions as well as public compliance communication (PCC) 5D for guidance on how to register, both of which are available on www.fic.gov.za.
Reporting obligations
As part of FIC Act obligations, accountable institutions must file regulatory reports that assist in combating ML, TF and PF.
The three main regulatory reporting streams for accountable institutions are cash threshold, suspicious and unusual transaction, and terrorist property reports.
Cash threshold reporting
Accountable institutions are required to report to the FIC cash transactions exceeding R49 999,99 this is where the entity pays or receives funds from a client in cash in excess of the threshold.
The report should be submitted as soon as possible but no later than three working days after becoming aware of the cash transaction that has exceeded the threshold.
For further guidance on cash threshold reports (CTRs), refer to Guidance Note 5C.
Suspicious and unusual transactions and activities
All businesses in South Africa have the obligation to report suspicious and unusual transactions to the FIC in terms of section 29 of the FIC Act.
Any person associated with a business and who suspects that the business has received or is about to receive proceeds of unlawful activities or property connected to an offence relating to the financing of terrorism must file a suspicious and unusual transaction report (STR).
STRs are submitted in respect of transactions while suspicious activity reports are filed where the suspicion is about an activity or transaction which is incomplete, abandoned or cancelled.
Where the report relates to terrorist financing, the entity must either submit a terrorist financing transaction report or a terrorist financing activity report.
STRs should be submitted as soon as possible without delay but no later than 15 working days after a person became aware of the facts which gave rise to the suspicion.
For further guidance, refer to Guidance Note 4B.
Targeted financial sanctions
South Africa implements the targeted financial sanctions (TFS) measures which originate from the United Nations Security Council (UNSC) resolutions.
TFS place financial restrictions on designated persons and entities from having access to funds and property.
It is prohibited to transact with or provide services to a designated person or entity this prohibition is applicable to all persons in South Africa.
Accountable institutions are required to screen client information against the TFS list.
When an accountable institution identifies a designated person or entity as a client or a person or entity who is linked to its client, it must immediately cease any activity in relation to that designated person or entity.
Additionally, where an accountable institution confirms a match with a designated person or entity, the accountable institution must file a terrorist property report (TPR) in terms of section 28A of the FIC Act.
For further guidance, refer to public compliance communication 44A.
For compliance information and guidance, refer to the FIC website (www.fic.gov.za). The FIC’s compliance contact centre can be reached on +27 12 641 6000 or log an online compliance query by clicking on: Compliance queries
