The Financial Intelligence Centre (FIC) reminds accountable institutions listed under Schedule 1 of the Financial Intelligence Centre Act (FICA) of the looming deadlines to submit their respective risk and compliance return questionnaires by the end of May and July 2023.
Directive 6 and Directive 7 and an associated risk and compliance return questionnaire were gazetted on 31 March 2023.
Accountable institutions are required to complete the risk and compliance return to help gauge their understanding of money laundering, terrorist financing and proliferation financing (ML/TF/PF).
The risk and compliance return questionnaire is designed to gather pertinent information that will enable the FIC to better understand, assess, mitigate, and monitor the ML/TF/PF risks associated with these institutions. This, in turn, allows for co-ordinated domestic efforts to combat ML/TF/PF and support accountable institutions in meeting their FICA obligations, thereby advancing the fight against financial crime.
Directive 6 applies to accountable institutions that are designated as non-financial businesses and professions (DNFBPs) as listed in items 1, 2, 3 and 9 of Schedule 1 to FICA. The DNFBPs listed in Schedule 1 that must complete the risk and compliance return are:
- Legal practitioners (item 1);
- Trust and company service providers (item 2);
- Property practitioners (item 3); and
- The gambling sector (item 9).
The risk and compliance return for DNFBPs covers the reporting period from 1 April 2022 to 31 March 2023 and must be submitted to the FIC no later than 5pm on Wednesday, 31 May 2023.
Directive 7 speaks to all credit providers (item 11), the South African Postbank (item 14), high-value goods dealers (item 20), the South African Mint (item 21), and crypto asset service providers (item 22).
These sectors must file their risk and compliance return to the FIC by no later than 5pm on Monday, 31 July 2023. The risk and compliance return covers the reporting period from 1 January 2023 to 30 June 2023.
Failure to submit the risk and compliance returns will be considered as non-compliance with the directives, which may result in an administrative sanction.
New sectors’ compliance with Directives 6 and 7
Amendments to Schedule 1 to FICA came into effect on 19 December 2022 and brought additional categories of institutions and businesses under its regulatory scope.
The inclusion of additional sectors as accountable institutions aligned South Africa’s anti-money laundering/countering the financing of terrorism framework more closely with the international standards set by the Financial Action Task Force.
The new sectors covered in Directives 6 and 7 are required to register with the FIC as accountable institutions and fulfil certain regulatory obligations. These include implementing customer identification and verification, customer due diligence, appointing a compliance officer, training employees on FICA compliance and ML/TF/PF risk exposure, undertaking business risk assessments for ML/TF/PF, and maintaining and implementing a risk management and compliance programme.
Accountable institutions are also required to file regulatory reports relating to suspicious and unusual transactions, cash transactions exceeding the prescribed threshold, and on property that is linked to sanctioned persons, terrorist activity or terrorist organisations.
The new accountable institutions must answer all the questions in the risk and compliance return questionnaire based on their understanding of ML/TF/PF risks and their implementation of current risk-based controls in compliance with their FICA obligations.
For more compliance information and guidance offered to accountable institutions, refer to the FIC’s 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 http://www.fic.gov.za/ContactUs/Pages/ComplianceQueries.aspx
