The Financial Intelligence Centre (FIC) will impose sanctions – which may include a fine – on certain accountable institutions that do not submit a risk and compliance return (RCR) by Friday.
The FIC issued Directive 6 on 31 March, requiring certain accountable institutions listed in Schedule 1 of the Financial Intelligence Centre Act (FICA) to submit the RCR by 31 May.
These accountable institutions, known as designated non-financial businesses and professions, are:
- legal practitioners (item 1);
- trust and company service providers (item 2);
- estate agents (item 3); and
- gaming institutions (item 9).
Click here to read how Schedule 1 defines these accountable institutions.
The RCR covers the period 1 April 2022 to 31 March 2023 (both dates inclusive).
The return requires the applicable accountable institutions to submit information to the FIC on their understanding of money laundering, terrorist financing, and proliferation financing risks, as well as an assessment of their compliance with their FICA obligations.
In August, the Centre issued a “final demand” to accountable institutions that had failed to comply with Directive 6.
Read: FIC issues ‘final demand’ to accountable institutions to comply with Directive 6
Despite this, and notwithstanding the “numerous initiatives and engagements” the FIC held with affected accountable institutions before and after issuing the “final demand”, large numbers of affected accountable institutions have chosen not to submit their RCRs, the Centre said in a statement dated 5 October.
Non-compliance with Directive 6 is negatively impacting the FIC’s capability to address deficiencies in the Financial Action Task Force’s action plan for South Africa, the statement said.
The FIC has given accountable institutions that have not submitted their RCRs to do so by 5pm on Friday, 13 October. Non-compliance will result in an administrative sanction.
The administrative sanctions available to the FIC for non-compliance with FICA are:
- a public reprimand;
- a remediation directive;
- the restriction or suspension of certain business activities; and
- a fine of up to R10 million for a natural person or up to R50m for a legal person.
To complete the RCR, the relevant accountable institutions must populate the form on the FIC’s website using this link.
Only accountable institutions that have successfully registered with the FIC on its registration and reporting platform (goAML) and received a FIC organisation identity number (Org ID) may submit an RCR.
Read: An accountable institution must register with the FIC to submit a risk and compliance return
For queries on the RCR submission process, contact the FIC as follows:
- Use the Compliance Queries link on the FIC’s website.
- Call the FIC compliance contact centre on 012 641 6000 and select option 1.
We can help with registration and overall FICA compliance
In addition to registering with the FIC, FICA requires all accountable institutions to fulfil the following compliance obligations:
- Implement a risk-based approach to customer due diligence, including aspects such as ongoing due diligence, enhanced due diligence, screening for domestic and foreign politically exposed persons, and establishing the beneficial ownership in legal structures.
- Develop a risk management and compliance programme (RMCP).
- Keep records of customers’ information and transactions.
- Adhere to the governance obligations as outlined in FICA.
- Undertake business risk assessments for money laundering, terrorist financing, and proliferation financing.
- Train employees on how to comply with FICA and the institution’s RMCP.
- Submit regulatory reports to the FIC relating to suspicious and unusual transactions, cash transactions exceeding the prescribed threshold, property that is linked to sanctioned persons, terrorist activity or terrorist organisations, and electronic cross-border transfers of funds.
At Moonstone Compliance, we have 20 years of experience in providing solutions in respect of FICA, anti-money laundering, counter-terrorist financing, and counter-proliferation financing compliance. We offer solutions ranging from basic toolkits and packaged solutions to developing completely bespoke solutions, depending on the client’s needs.
Click here to read more about Moonstone Compliance’s suite of FICA services or send us an online enquiry.
