The Financial Intelligence Centre (FIC) has issued, for comment, a draft guidance on the measures accountable institutions must take to comply with their targeted financial sanctions (TFS) obligations.
South Africa implements the TFS that originate from United Nations Security Council resolutions under Chapter VII of the Charter of the UN. Security Council resolutions relate to, among other things, the prevention and suppression of terrorism and terrorist financing, and the prevention, suppression, and disruption of the proliferation of weapons of mass destruction (WMD). The measures range from comprehensive economic and trade sanctions to targeted measures, such as arms embargoes, travel bans, and financial or commodity restrictions.
The Financial Action Task Force’s Recommendations 6 and 7 require all member countries to implement Security Council resolutions on TFS.
South Africa’s TFS obligations require accountable institutions to scrutinise client information against TFS lists to identify designated persons and entities directly or indirectly linked to clients, freeze the assets of designated persons or entities, and file terrorist property and suspicious and unusual transaction reports with the FIC.
Draft Public Compliance Communication 44A addresses the updated approach to TFS as set out in the Financial Intelligence Centre Act (FICA) and the Protection of Constitutional Democracy Against Terrorist and Related Activities (POCDATARA) Act, through the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act of 2022 and the POCDATARA Amendment Act of 2023.
The final version of PCC 44A is intended to replace PCC 44 and PCC 54, which are now out of date. PCC 44, which was issued in March 2020, provides an overview of the TFS regimes that apply in South Africa. PCC 54, which was issued in September 2022, provides an overview of the compliance measures aimed at combating the financing of WMD.
PCC 44A also sets out examples of the terrorist and proliferation financing risks accountable institutions might face and provides recommendations regarding the implementation of a risk-based approach to combating the financing of terrorism and the proliferation of WMD.
The FIC said PCC 44A, which applies to all accountable institutions, must be read together with:
- Guidance Note 6A, which provides guidance on accountable institutions’ terrorist property reporting obligations;
- the South African National Terrorism Financing Risk Assessment; and
- the FIC’s TFS Manual.
The deadline to comment on the draft guidance is the close of business on 11 January 2024. Comments must be submitted via the online link.
The FIC intends to publish a final version of the PCC by 28 February 2024.
Any questions or requests relating to draft PCC 44A must be sent to consult@fic.gov.za.
