Hot on the heels of its proposed amendments to Joint Standard 1 of 2020 pertaining to the significant owners of FSPs, the FSCA has asked for reports from certain FSPs and collective investment scheme (CIS) managers on their ownership.
Read: FSCA wants ‘honesty and integrity’ Joint Standard to apply to the significant owners of FSPs
FSPs that operate as sole proprietorships or partnerships will, no doubt, be pleased to know that they are among the entities that are excluded from the request for information (RFI).
As with the draft amendments to the Joint Standard, the RFI has, in part, been triggered by the regulators’ moves to head off South Africa’s potential grey-listing by the Financial Action Task Force (FATF), the global watchdog for money laundering and terrorist financing.
The RFI applies to FSPs, as defined in the FAIS Act, and managers, as defined in the Collective Investment Schemes Control Act, that are also designated as accountable institutions in terms of the Financial Intelligence Centre Act (Fica).
However, it excludes:
- Banks, mutual banks and insurers licensed by the Prudential Authority (PA). These entities will be required to provide ownership information to the PA in a form and manner determined by the PA.
- FSPs that are authorised for non-life insurance and/or health service benefit products only, because these entities are not designated as accountable institutions in terms of Fica.
- Sole proprietors and partnerships, as these businesses are not separate legal entities. They are owned and operated by the individuals directly licensed by the FSCA.
The FSCA said it was necessary for the Authority to scrutinise the ownership of the entities it supervises more closely, to help mitigate the risk of financial institutions being used to facilitate criminal activity.
It said that in some instances, the owner (including a beneficial owner) of a financial institution can influence and control the institution’s business. A financial institution may thus unwittingly be used by such an owner as a mechanism or channel to facilitate criminal activity.
It also drew attention to FATF Recommendation 26, which 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 …”.
As a member of FATF, South Africa must adhere to the FATF’s Recommendations. A failure to do so could have severely negative effects on the economy, the FSCA said.
Deadline is 30 September
Affected financial institutions must submit the requested information by 30 September.
Institutions must submit the information via the FSCA’s online submission system by entering their existing login credentials for either the FAIS or the CIS/Hedge Fund e-portal, as applicable, at this link.
Once logged in, users must select the “Beneficial Ownership Information” option and complete all the required fields.
A user guide containing step-by-step guidance on how to submit the information is available on the e-portal login page.
Affected financial institutions must also upload an organogram depicting their total ownership and control structure, to enable the FSCA to verify the ownership information.
The RFI provides an example of how the organogram must be set out.
RFI 6 of 2022 can be downloaded from www.fsca.co.za > Regulatory framework > Notices > General > 2022.
FSPs that need assistance with e-portal login credentials can contact Akashen Rampersadh at Akashen.Rampersadh@fsca.co.za, while CIS managers can email Annelize Slabbert at Annelize.Slabbert@fsca.co.za.
Enquiries regarding the RFI must be sent to the FSCA’s Business Centre at RFI@fsca.co.za.
