Financial Intelligence Centre Act: Increase in the number of sectors as accountable institutions

18 Apr 2023

The Minister of Finance has officially amended the schedules to the Financial Intelligence Centre Act (Act no. 38 of 2001) (“the FIC Act”) through the issue of Government Gazette 47596 , which amendments came into effect on 19 December 2022.

The amendments relate to changes affecting accountable institutions listed in Schedule 1, supervisory bodies listed in Schedule 2, and reporting institutions listed in Schedule 3 of the FIC Act.

The amendments significantly increase the number of sectors included as accountable institutions in Schedule 1 to the FIC Act. It is anticipated that the increased sectoral coverage will reduce money laundering combat the financing of terrorism and increase financing supervision and monitoring, thereby addressing the weaknesses identified by the Financial Action Task Force in its evaluation of South Africa.

It is anticipated that increasing the number of sectors included as accountable institutions will improve the Financial Intelligence Centre’s (“the FIC”) ability to obtain information concerning the financial activities of customers from a wider range of financial institutions, non-financial institutions, as well as crypto asset service providers. It will also augment the quality of financial intelligence reports that the FIC provides to law enforcement, supervisory bodies, and policy formulating entities.

The new accountable institutions include co-operative banks, trust and company service providers, a wider category of credit providers, high-value goods dealers, the South African Mint Company, crypto asset service providers, informal money or value transfer providers, and payment clearing service operators. They will be required to register with the FIC as accountable institutions and fulfil regulatory obligations such as implementing customer identification, verification and due diligence processes, appoint a compliance officer, train employees on the provisions of the FIC Act, undertake business risk assessments for money laundering and financing of terrorism, and maintain and implement a risk management and compliance programme. They will also be required to file regulatory reports relating to suspicious and unusual transactions, cash transactions exceeding the prescribed monetary threshold and on property that is linked to sanctioned persons, terrorist activities or terrorist organisations.

The FIC will oversee and enforce compliance with the FIC Act among non-financial sectors including trust and company service providers, legal practitioners, high-value goods dealers, the South African Mint Company, crypto asset providers, and credit providers.

There will be an 18 month grace period from the date of commencement of the amendments, during which the FIC and supervisory bodies will focus on entrenching compliance with the FIC Act in the new number of sectors included as accountable institutions. It is not envisaged that any penalties will be levied against these accountable institutions during the grace period.

Article sourced from Gildenhuys Malatji Incorporated.

See also:

• The cost of FICA non-compliance
• Publication of draft Companies Act Regulations to enable beneficial ownership of shares to be determined
• Crypto Assets as Regulated Financial Products
• Beneficial Ownership regulations are strengthened to address FATF’s grey listing

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)