The latest Enforcement Committee order, against a stockbroking firm, should act as a warning to all financial services providers to ensure that they comply with the requirements of the Financial Intelligence Centre Act (FICA).
Of particular relevance in this case is the identification of clients.
The firm provided investment and securities trading services to approximately 4 300 private clients. Following an internal audit conducted in 2010, it identified that, in respect of a number of these private clients, it had established a business relationship (as authorised user) with these clients or had previously established a business relationship, and concluded securities transactions on behalf of these clients.
It was also established that it failed to take all the prescribed steps to establish or verify the identity of these clients (including the clients’ full names, date of birth, identity number and residential address).
The Registrar took into account, amongst others, that the firm:
- made an concerted effort to rectify the non-compliance and has been largely successful in doing so;
- willingly disclosed the irregularities to its direct supervisor, i.e. the JSE; and
- implemented systems to ensure future compliance with the Act at the time of opening client accounts.
- many of the non-compliant accounts were already dormant when the relevant provisions of the Act came into operation; and
- the Enforcement Committee has not made a determination against Thebe Stockbroking before.
Consequently, the Registrar agreed to a penalty of R500 000, which penalty was imposed by the Enforcement Committee on the Respondents on 20 October 2015.
Section 21 of the FICA stipulates the following:
An accountable institution may not establish a business relationship, or conclude a single transaction with a client, unless the accountable institution has taken the prescribed steps to establish and verify the identity of the client. This also applies to situations where business relations were established with a client before this Act took effect.
Who needs to register?
The following guidelines were provided by the FIC:
All FSPs (with the exclusion of FSPs only registered to provide advisory and intermediary services in respect of short-term insurance and/or health service benefits) must register with the Financial Intelligence Centre (the FIC) in terms of the Financial Intelligence Centre Act, No. 38 of 2001, as amended (the FIC Act).
Registration commenced on 01 December 2010 and all FSPs had to be registered by 01 March 2011.
All Moonstone Compliance clients, including Protector Service clients, and their staff, have access to free online FICA training. Please bear in mind that you are not only required to undergo such training – you also need to brush up on your knowledge on a regular basis.
- Moonstone Comprehensive Compliance clients should please contact their compliance officers to make use of this service.
- Moonstone Protector clients can contact Lize to access the online training facility.
If you are not yet a Moonstone Compliance client, and interested in finding out what else we can do for you, please complete our “no-obligation” Compliance enquiry form. Alternatively, please call Charné on 021 883 800 or send an email to support@moonstonecompliance.co.za for someone to contact you.
