Time is running out for new accountable institutions to register with the FIC

Amendments to the Financial Intelligence Centre Act (Fica), as embodied in the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act, started to come into effect on 31 December 2022. All the amendments will be in force by 1 April this year.

Read: When the new anti-money laundering provisions take effect

The amendments to Fica are part of the government’s efforts to reduce the prospect of South Africa’s grey-listing by the Financial Action Task Force by addressing certain deficiencies identified in its Mutual Evaluation Report of South Africa in 2021.

It’s important to note that the enhanced compliance requirements occasioned by these amendments will apply to a wider range of commercial activities. This is because amendments to Schedule 1 of Fica mean more individuals and businesses have, by definition, become accountable institutions.

Read: Will your business be an accountable institution from 19 December?

The amendments to Schedule 1 took effect on 19 December 2022. The amendments do not contain transitional provisions, and the obligations to comply with Fica as an accountable institution are officially in effect.

Persons regarded as accountable institutions are required to register with the Financial Intelligence Centre (FIC) within 90 days from the date on which new business as an accountable institution commenced, which means that new accountable institutions have until 19 March 2023 to do so. The failure to register with the FIC can lead to administrative sanctions, including fines.

In addition to registering with the FIC, accountable institutions are required to fulfil certain regulatory obligations, such as:

• Implementing customer identification and verification processes;
• Conducting customer due diligence;
• Appointing a compliance officer;
• Training employees on Fica compliance;
• Undertaking business risk assessments; and
• Maintaining and implementing a risk management and compliance programme.

Meanwhile, amendments to the Fica regulations that took effect in February place new reporting obligations on accountable institutions authorised to deal in foreign currency. All electronic cross-border transactions exceeding the prescribed threshold of R20 000 must be reported to the FIC.

Read: New regulations on reporting the movement of money to and from South Africa

It’s clear the Fica compliance burden is increasing for more businesses, and, in light of the FIC’s enhanced powers, it’s more important for them to understand their obligations – and to seek expert help if they don’t.

Read: Latest Fica amendments: 5 key takeaways for accountable institutions

Moonstone Business School of Excellence has a Fica Awareness short course for employees of accountable institutions. The course covers basic money-laundering and terrorist financing concepts, anti-money-laundering legislation, the risk-based approach, and looks at the requirements for customer due diligence, reporting of certain transactions and record-keeping requirements. Click here for more information.