The FSCA will be verifying the information – including criminal records and qualifications – held about the significant owners of certain financial institutions, and other designated individuals, as part of its efforts to combat financial crime.
In a communication published on 17 October, the FSCA said the verification exercise will include the following individuals:
- The significant owners, key individuals, directors, shareholders, members, and trustees of authorised financial services providers unless those FSPs are excluded.
- The significant owners and directors of collective investment scheme (CIS) managers.
The following financial institutions are excluded from the verification process:
- Banks, mutual banks, and insurers licensed by the Prudential Authority (PA). The verification process for these entities will be determined by the PA.
- FSPs that are authorised for non-life and/or health service benefit products only.
- Sole proprietors and partnerships.
- Members of the controlling body and senior management of over-the-counter derivative providers.
The FSCA will undertake a separate verification process in respect of the entities listed in points 2 to 4 above.
The individuals affected by the verification process may be participants in the entities that were included in the FSCA’s exercise last year to gather information about the ownership of FSPs and CIS managers. Information Request 6 of 2022 (RFI 6/2022), as does the verification process, excluded sole proprietors, FSPs that are authorised for non-life insurance and/or health service benefit products only, and banks, mutual banks, and insurers licensed by the PA.
Read: FSCA wants ownership reports from certain FSPs and CIS managers
The deadline to submit the information requested in RFI 6/2022 was 30 September 2022.
In communication about the verification process, the FSCA said the e-portals through which the requested information was submitted may be used to update any changes to the information initially provided in response to RFI 6/2022.
Compliance with FATF Recommendations
The verification exercise forms part of the FSCA’s ongoing efforts to ensure that South Africa adheres to the standards (“recommendations”) set by the Financial Action Task Force (FATF), the global watchdog for combating money laundering and terrorist financing.
As a member of the FATF, South Africa must adhere to the FATF’s Recommendations by implementing measures to detect and prevent the misuse of the financial system for illegal activities.
FATF Recommendation 26 states: “Countries should ensure that financial institutions are subject to adequate regulation and supervision and are effectively implementing the FATF Recommendations. Competent authorities or financial supervisors should take the necessary legal or regulatory measures to prevent criminals or their associates from holding, or being the beneficial owner of, a significant or controlling interest, or holding a management function in, a financial institution …”
The FSCA is responsible for supervising and enforcing compliance with the Financial Intelligence Centre Act by authorised users of an exchange, CIS managers, and FSPs.
Continuous verification
The Authority has implemented additional measures to ensure that the significant owners of financial institutions are fit and proper.
Since 1 June 2022, it has been verifying the information, including the criminal records, relating to all new licence applicants.
Applicants must provide all the necessary verification information relating to sole proprietors, significant owners, key individuals, directors, shareholders, members, trustees, and partners of FSPs, as well as the significant owners and directors of CIS managers.
In future, the FSCA intends to verify continuously the existing information on its system in respect of currently licensed entities, including the criminal records of significant owners, directors, shareholders, members, and trustees of FSPs, as well as the significant owners and directors of CIS managers.
Fingerprinting outsourced
Individuals affected by the verification process may be contacted by Managed Integrity Evaluation (Pty) Ltd (MIE), which the FSCA has appointed to verify records such as qualifications and criminal records on its behalf.
MIE will contact individuals to have their fingerprints taken at one of its “fingerprint zones” or satellite offices. MIE will send a link to individuals (using their contact details as recorded on the FSCA’s system) to make a booking at the closest zone or office on a suitable date and time. Individuals must bring their identity document or passport to the appointment.
The FSCA said it expects the verification process and the contacting of individuals will start on 1 November.
Enquiries about the verification process must be sent to RFI@fsca.co.za.
