Co-operative banks, company service providers, a wider category of credit providers, high-value goods dealers, the South African Mint Company, crypto asset service providers (CASPs) informal money or value transfer providers and payment clearing service operators will soon be included in Schedule 1 of the Financial Intelligence Centre Act (FIC Act).
This after Finance Minister Enoch Godongwana on Wednesday amended the Schedules in the FIC Act in an effort to enhance anti-money laundering, combating the financing of terrorism and countering proliferation financing supervision and monitoring, which comes into effect from December 19.
The FIC said on Wednesday in a statement that in the first 18 months from the date of commencement of the amendments, the FIC and supervisory bodies would focus on entrenching the FIC Act risk and compliance provisions and implementation among the new sectors in Schedule 1 to the FIC Act.
“Supervisory bodies will conduct inspections and, where warranted, issue remedial administrative sanctions, based on a risk-based approach, to correct identified areas of non-compliance. In respect of the new sectors, the FIC and supervisory bodies do not envisage issuing financial penalties for non-compliance with the FIC Act during the transitional 18-month period,” it said.
The move also comes as South Africa scrambles to tighten up its financial legislation after the Financial Action Task Force (FATF) published its Report on South African Anti-money Laundering and Counter Terrorist Financing Measures. In October 2021, which concluded that South Africa was only partially compliant with 17 of the FATF technical Recommendations and totally non-compliant with three of them, putting into doubt the country’s ability to ensure safeguards in accordance with international standards.
FATF places countries that are not technically compliant with their Recommendations under increased scrutiny and monitoring, called greylisting.
Godongwana made these amendments following several years of consultation between the Financial Intelligence Centre (FIC) and affected sectors, industry bodies and supervisory bodies.
The changes would significantly increase the number of sectors included as accountable institutions in Schedule 1 to the FIC Act.
This increased sectoral coverage would enhance anti-money laundering, combating the financing of terrorism and countering proliferation financing (AML/CFT/CPF).
“The new sectors will be required to register with the FIC as accountable institutions and fulfil certain regulatory obligations. These include implementing customer identification and verification, customer due diligence, appointing a compliance officer, training employees on FIC Act compliance and ML/TF/PF risk exposure, undertaking business risk assessments for ML/TF/PF, and maintaining and implementing a risk management and compliance programme,” it said.
Accountable institutions were also required to file regulatory reports relating to suspicious and unusual transactions, cash transactions exceeding the prescribed threshold and on property that is linked to sanctioned persons, terrorist activity or terrorist organisations.
It said some of the amendments related to widening of the scope of activities of businesses under Schedule 1.
“These include item 2 (trust and company service providers), item 11 (credit providers), item 19 (money or value transfer providers which includes informal money remitters).”
It also said the FIC would oversee and enforce FIC Act risk and compliance adherence among non-financial sectors including trust and company service providers, legal practitioners, high-value goods dealers, South African Mint Company, CASPs, and credit providers.
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