Financial entities are strongly advised to review and reinforce their anti-money laundering (AML) and counter-terrorist financing (CTF) controls, as the Financial Sector Conduct Authority wraps up the year with R1.2 million in fines for non-compliance with the Financial Intelligence Centre Act (FICA).
In a statement last week, the FSCA said administrative sanctions had been imposed on Prime Collective Investment Scheme Management Company (RF) (Pty) Ltd and Wealth Portfolio Managers (Pty) Ltd for failing to meet key provisions of FICA.
Prime received a fine of R1.6m, while Wealth was fined R200 000. Notably, a portion of Prime’s sanction – R600 000 – was conditionally suspended for three years.
Both companies are licensed under different acts: Prime under the Collective Investment Schemes Control Act and Wealth under the Financial Advisory and Intermediary Services Act. However, both entities are also accountable institutions under FICA, which aims to combat money laundering, the financing of terrorism, and related criminal activities.
The FSCA’s inspections found that both Prime and Wealth had failed to meet several compliance requirements. For instance, the institutions were found lacking in their risk management and compliance programmes (RMCPs), which are required to be developed, documented, maintained, and implemented according to FICA.
Although both companies had RMCPs in place, they were deemed insufficient, failing to detail how they would comply with various FICA provisions. Neither institution could demonstrate that its RMCP was implemented effectively.
Additionally, both entities neglected to perform necessary customer due diligence, a key requirement of FICA. Prime failed to verify the beneficial owners of legal persons and trusts, while Wealth did not conduct ongoing due diligence or verify whether clients were politically exposed persons. Wealth also failed to check client information against the United Nations Security Council Targeted Financial Sanctions List, as required by the Protection of Constitutional Democracy Against Terrorist and Related Activities Act.
The FSCA’s findings also highlighted that Wealth’s senior management had not ensured the institution’s compliance with FICA, underscoring the importance of compliance at the highest levels within financial entities.
The FSCA issued directives to both institutions to remediate the identified deficiencies.
Wealth also received a caution and a formal reprimand.
The FSCA’s inspection at Prime was performed in late November 2023.
Corrective measures
Ivan Dabrowski, compliance manager at Prime, told Moonstone that the company takes the sanction very seriously and with utmost respect for the regulatory environment in which it operates, as well as the regulator.
“We have conducted a thorough review of the circumstances leading to the sanction and are actively implementing corrective measures to address the issues identified, some of which have already been resolved.”
Dabrowski said Prime’s priority is to ensure that its regulatory and administrative infrastructure is robust, and the circumstances that led to the sanction do not occur again.
“We are working closely with the FSCA to resolve this matter promptly. Our team is dedicated to enhancing our compliance procedures and ensuring adherence to all regulatory standards.”
He says Prime has implemented and is implementing significant changes to strengthen its practices, “which reflect our commitment to maintaining the highest standards of integrity, compliance and service”.
Dabrowski said aspects of Prime’s policies and procedures did not fully comply with updates to legislation timeously, and certain client files had not been sufficiently updated in accordance with Prime’s standards and risk-based approach.
“With that being said, we accepted and paid the R1m fine.”
Moonstone also attempted to contact Wealth but was unable to reach the FSP for comment.
The FSCA said it considers Prime and Wealth’s compliance deficiencies to be serious breaches of FICA.
“The requirement to understand and mitigate money laundering and terrorist financing risks through effective implementation of an RMCP is vital not only because it assists accountable institutions to protect and maintain the integrity of their own businesses but also because it helps contribute to the integrity of the South African financial system as a whole,” the Authority said.
Financial entities are strongly advised to review and reinforce their anti-money laundering (AML) and counter-terrorist financing (CTF) controls, as the Financial Sector Conduct Authority wraps up the year with R1.2 million in fines for non-compliance with the Financial Intelligence Centre Act (FICA).
In a statement last week, the FSCA said administrative sanctions had been imposed on Prime Collective Investment Scheme Management Company (RF) (Pty) Ltd and Wealth Portfolio Managers (Pty) Ltd for failing to meet key provisions of FICA.
Prime received a fine of R1.6m, while Wealth was fined R200 000. Notably, a portion of Prime’s sanction – R600 000 – was conditionally suspended for three years.
Both companies are licensed under different acts: Prime under the Collective Investment Schemes Control Act and Wealth under the Financial Advisory and Intermediary Services Act. However, both entities are also accountable institutions under FICA, which aims to combat money laundering, the financing of terrorism, and related criminal activities.
The FSCA’s inspections found that both Prime and Wealth had failed to meet several compliance requirements. For instance, the institutions were found lacking in their risk management and compliance programmes (RMCPs), which are required to be developed, documented, maintained, and implemented according to FICA.
Although both companies had RMCPs in place, they were deemed insufficient, failing to detail how they would comply with various FICA provisions. Neither institution could demonstrate that its RMCP was implemented effectively.
Additionally, both entities neglected to perform necessary customer due diligence, a key requirement of FICA. Prime failed to verify the beneficial owners of legal persons and trusts, while Wealth did not conduct ongoing due diligence or verify whether clients were politically exposed persons. Wealth also failed to check client information against the United Nations Security Council Targeted Financial Sanctions List, as required by the Protection of Constitutional Democracy Against Terrorist and Related Activities Act.
The FSCA’s findings also highlighted that Wealth’s senior management had not ensured the institution’s compliance with FICA, underscoring the importance of compliance at the highest levels within financial entities.
The FSCA issued directives to both institutions to remediate the identified deficiencies.
Wealth also received a caution and a formal reprimand.
The FSCA’s inspection at Prime was performed in late November 2023.
Corrective measures
Ivan Dabrowski, compliance manager at Prime, told Moonstone that the company takes the sanction very seriously and with utmost respect for the regulatory environment in which it operates, as well as the regulator.
“We have conducted a thorough review of the circumstances leading to the sanction and are actively implementing corrective measures to address the issues identified, some of which have already been resolved.”
Dabrowski said Prime’s priority is to ensure that its regulatory and administrative infrastructure is robust, and the circumstances that led to the sanction do not occur again.
“We are working closely with the FSCA to resolve this matter promptly. Our team is dedicated to enhancing our compliance procedures and ensuring adherence to all regulatory standards.”
He says Prime has implemented and is implementing significant changes to strengthen its practices, “which reflect our commitment to maintaining the highest standards of integrity, compliance and service”.
Dabrowski said aspects of Prime’s policies and procedures did not fully comply with updates to legislation timeously, and certain client files had not been sufficiently updated in accordance with Prime’s standards and risk-based approach.
“With that being said, we accepted and paid the R1m fine.”
Moonstone also attempted to contact Wealth but was unable to reach the FSP for comment.
The FSCA said it considers Prime and Wealth’s compliance deficiencies to be serious breaches of FICA.
“The requirement to understand and mitigate money laundering and terrorist financing risks through effective implementation of an RMCP is vital not only because it assists accountable institutions to protect and maintain the integrity of their own businesses but also because it helps contribute to the integrity of the South African financial system as a whole,” the Authority said.
Financial entities are strongly advised to review and reinforce their anti-money laundering (AML) and counter-terrorist financing (CTF) controls, as the Financial Sector Conduct Authority wraps up the year with R1.2 million in fines for non-compliance with the Financial Intelligence Centre Act (FICA).
In a statement last week, the FSCA said administrative sanctions had been imposed on Prime Collective Investment Scheme Management Company (RF) (Pty) Ltd and Wealth Portfolio Managers (Pty) Ltd for failing to meet key provisions of FICA.
Prime received a fine of R1.6m, while Wealth was fined R200 000. Notably, a portion of Prime’s sanction – R600 000 – was conditionally suspended for three years.
Both companies are licensed under different acts: Prime under the Collective Investment Schemes Control Act and Wealth under the Financial Advisory and Intermediary Services Act. However, both entities are also accountable institutions under FICA, which aims to combat money laundering, the financing of terrorism, and related criminal activities.
The FSCA’s inspections found that both Prime and Wealth had failed to meet several compliance requirements. For instance, the institutions were found lacking in their risk management and compliance programmes (RMCPs), which are required to be developed, documented, maintained, and implemented according to FICA.
Although both companies had RMCPs in place, they were deemed insufficient, failing to detail how they would comply with various FICA provisions. Neither institution could demonstrate that its RMCP was implemented effectively.
Additionally, both entities neglected to perform necessary customer due diligence, a key requirement of FICA. Prime failed to verify the beneficial owners of legal persons and trusts, while Wealth did not conduct ongoing due diligence or verify whether clients were politically exposed persons. Wealth also failed to check client information against the United Nations Security Council Targeted Financial Sanctions List, as required by the Protection of Constitutional Democracy Against Terrorist and Related Activities Act.
The FSCA’s findings also highlighted that Wealth’s senior management had not ensured the institution’s compliance with FICA, underscoring the importance of compliance at the highest levels within financial entities.
The FSCA issued directives to both institutions to remediate the identified deficiencies.
Wealth also received a caution and a formal reprimand.
The FSCA’s inspection at Prime was performed in late November 2023.
Corrective measures
Ivan Dabrowski, compliance manager at Prime, told Moonstone that the company takes the sanction very seriously and with utmost respect for the regulatory environment in which it operates, as well as the regulator.
“We have conducted a thorough review of the circumstances leading to the sanction and are actively implementing corrective measures to address the issues identified, some of which have already been resolved.”
Dabrowski said Prime’s priority is to ensure that its regulatory and administrative infrastructure is robust, and the circumstances that led to the sanction do not occur again.
“We are working closely with the FSCA to resolve this matter promptly. Our team is dedicated to enhancing our compliance procedures and ensuring adherence to all regulatory standards.”
He says Prime has implemented and is implementing significant changes to strengthen its practices, “which reflect our commitment to maintaining the highest standards of integrity, compliance and service”.
Dabrowski said aspects of Prime’s policies and procedures did not fully comply with updates to legislation timeously, and certain client files had not been sufficiently updated in accordance with Prime’s standards and risk-based approach.
“With that being said, we accepted and paid the R1m fine.”
Moonstone also attempted to contact Wealth but was unable to reach the FSP for comment.
The FSCA said it considers Prime and Wealth’s compliance deficiencies to be serious breaches of FICA.
“The requirement to understand and mitigate money laundering and terrorist financing risks through effective implementation of an RMCP is vital not only because it assists accountable institutions to protect and maintain the integrity of their own businesses but also because it helps contribute to the integrity of the South African financial system as a whole,” the Authority said.
Financial entities are strongly advised to review and reinforce their anti-money laundering (AML) and counter-terrorist financing (CTF) controls, as the Financial Sector Conduct Authority wraps up the year with R1.2 million in fines for non-compliance with the Financial Intelligence Centre Act (FICA).
In a statement last week, the FSCA said administrative sanctions had been imposed on Prime Collective Investment Scheme Management Company (RF) (Pty) Ltd and Wealth Portfolio Managers (Pty) Ltd for failing to meet key provisions of FICA.
Prime received a fine of R1.6m, while Wealth was fined R200 000. Notably, a portion of Prime’s sanction – R600 000 – was conditionally suspended for three years.
Both companies are licensed under different acts: Prime under the Collective Investment Schemes Control Act and Wealth under the Financial Advisory and Intermediary Services Act. However, both entities are also accountable institutions under FICA, which aims to combat money laundering, the financing of terrorism, and related criminal activities.
The FSCA’s inspections found that both Prime and Wealth had failed to meet several compliance requirements. For instance, the institutions were found lacking in their risk management and compliance programmes (RMCPs), which are required to be developed, documented, maintained, and implemented according to FICA.
Although both companies had RMCPs in place, they were deemed insufficient, failing to detail how they would comply with various FICA provisions. Neither institution could demonstrate that its RMCP was implemented effectively.
Additionally, both entities neglected to perform necessary customer due diligence, a key requirement of FICA. Prime failed to verify the beneficial owners of legal persons and trusts, while Wealth did not conduct ongoing due diligence or verify whether clients were politically exposed persons. Wealth also failed to check client information against the United Nations Security Council Targeted Financial Sanctions List, as required by the Protection of Constitutional Democracy Against Terrorist and Related Activities Act.
The FSCA’s findings also highlighted that Wealth’s senior management had not ensured the institution’s compliance with FICA, underscoring the importance of compliance at the highest levels within financial entities.
The FSCA issued directives to both institutions to remediate the identified deficiencies.
Wealth also received a caution and a formal reprimand.
The FSCA’s inspection at Prime was performed in late November 2023.
Corrective measures
Ivan Dabrowski, compliance manager at Prime, told Moonstone that the company takes the sanction very seriously and with utmost respect for the regulatory environment in which it operates, as well as the regulator.
“We have conducted a thorough review of the circumstances leading to the sanction and are actively implementing corrective measures to address the issues identified, some of which have already been resolved.”
Dabrowski said Prime’s priority is to ensure that its regulatory and administrative infrastructure is robust, and the circumstances that led to the sanction do not occur again.
“We are working closely with the FSCA to resolve this matter promptly. Our team is dedicated to enhancing our compliance procedures and ensuring adherence to all regulatory standards.”
He says Prime has implemented and is implementing significant changes to strengthen its practices, “which reflect our commitment to maintaining the highest standards of integrity, compliance and service”.
Dabrowski said aspects of Prime’s policies and procedures did not fully comply with updates to legislation timeously, and certain client files had not been sufficiently updated in accordance with Prime’s standards and risk-based approach.
“With that being said, we accepted and paid the R1m fine.”
Moonstone also attempted to contact Wealth but was unable to reach the FSP for comment.
The FSCA said it considers Prime and Wealth’s compliance deficiencies to be serious breaches of FICA.
“The requirement to understand and mitigate money laundering and terrorist financing risks through effective implementation of an RMCP is vital not only because it assists accountable institutions to protect and maintain the integrity of their own businesses but also because it helps contribute to the integrity of the South African financial system as a whole,” the Authority said.
