Two sections of the Financial Intelligence Centre Amendment Act of 2017 came into effect on 18 August following the publication of a notice in the Government Gazette.
Section 6 changes the title of Chapter 3 of the Financial Intelligence Centre Act (Fica) to “Money laundering, financing of terrorism and related activities and financial sanctions control measures”.
Section 43 amends section 56 into the Act, which deals with the consequences if an accountable institution that is required to do so fails to report the prescribed information in respect of cross-border electronic funds transfers.
The amended section 56 includes sub-section (2), which provides that an accountable institution that fails to report to the Financial Intelligence Centre (FIC) the prescribed information in respect of an electronic transfer of money in accordance with section 31 is non-compliant and is subject to an administrative sanction.
The insertion of sub-section (2) means that such accountable institution is not only guilty of an offence but is now also non-compliant and subject to an administrative sanction.
Section 31 of Fica, read with regulations 23D and 24(5) of the Money Laundering and Terrorist Financing Control Regulations, places an obligation on accountable institutions to file an international funds transfer report (IFTR) with the FIC when sending or receiving electronic transfers of money from outside or into South Africa involving amounts above R19 999 on behalf of, or on the instruction of, another person.
The amount is the actual value that crosses the border and excludes any fees that may apply to the transaction.
The IFTR must be filed with the FIC within three days of the transaction or transfer date. The IFTR must also contain the prescribed particulars stipulated in Regulation 23E.
A failure to file an IFTR in accordance with these provisions constitutes an offence, for which any person or institution, on conviction, could face imprisonment for up to three years or a fine of up to R1 million.
Any person or institution who fails to file an IFTR within the prescribed period is regarded as non-compliant and will be subjected to an administrative sanction. This sanction may include financial penalties of up to R10m for natural persons and R50m for legal or juristic persons.
According to the FIC’s Draft Guidance Note 104A, the obligation to report international fund transfer transactions above the prescribed threshold applies only to certain categories of accountable institutions that are authorised to conduct the business of cross-border electronic funds transfers. These are institutions that are authorised in terms of the Regulations under the Currency and Exchanges Act to conduct transactions under the Regulations.
GN 104A says the accountable institutions with this authorisation are:
- Authorised dealers;
- Authorised dealers with limited authority;
- A category of financial services providers that have a direct reporting dispensation under the Exchange Control Regulations; and
- The Post Office.
Examples of cross-border EFT transactions that must be reported include:
- Remittances and payments through which funds are sent and/or payments are made to persons located outside South Africa;
- Remittances and payments through which persons in South Africa receive funds from persons located outside South Africa;
- Credit and debit card transactions where the transaction is linked to an account held in South Africa;
- Credit and debit card transactions where the transaction is linked to an account held outside South Africa; and
- Funds paid into, and refunded from, electronic wallets and cash passports intended for international spend.
Examples of transactions that do not have to be reported include:
- Cash withdrawals or deposits abroad – in other words, a debit or credit card deposit or withdrawal by a client. Note: A cash threshold report must be filed if the cash withdrawal or deposit abroad exceeds the cash threshold amount.
- Transactions relating to interbank transactions between banks – for example, settlement of account debits and credits between banks.
Click here to download Government Notice No. 3803 of 18 August 2023.
Click here to download the Financial Intelligence Centre Amendment Act of 2017.
Moonstone Compliance offers compliance, consulting, and training options for accountable institutions of all types and sizes to help them implement anti-money laundering procedures and meet the requirements of Fica.
Moonstone Compliance will explain the complex regulations and offer practical recommendations tailored to your business.
We provide a wide range of services, from providing documentation to implementing a full compliance framework. You can select a combination of services and have them customised to suit your needs.
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