Amendments to FICA adding new accountable institutions to the Schedule were published on 29 November 2022. These came into effect on 19 December 2022, ahead of the possible grey-listing of South Africa by the Financial Action Task Force.
Put simply, if you sell any items to the value of ZAR100 000 or more to anyone and payment is made in any form, you will be considered to be an accountable institution. This is regardless of whether you are a company, sole proprietor or any other type of business. Dealers in art, motor vehicles, equipment, scrap metal, and even bicycles and televisions will now be treated the same as banks and other financial institutions for purposes of FICA.
In addition, if you were to provide credit to your clients (or sell goods on terms), it is likely that you are an accountable institution regardless of whether the National Credit Act, 2005 (“NCA”) applies. Certain trustees, crypto asset service providers and other entities that may facilitate money laundering now constitute accountable institutions.
These institutions will no longer merely be required to perform customer due diligence or monitor whether transactions may involve money laundering or unlawful activities. The obligations imposed on accountable institutions go far beyond this and include amongst other things:
- registering as an accountable institution with the Financial Intelligence Centre (“FIC”) by mid-March 2023;
- formulating and implementing a risk management and compliance programme (“RMCP”);
- appointing a compliance officer; and
- providing staff training.
The board of directors of an juristic-person accountable institution, or the senior management of an accountable institution without a board of directors, must ensure compliance by the accountable institution and its employees with the provisions of FICA and its RMCP. In the case of sole proprietors, partnerships and the like, the person or persons exercising the highest level of authority in that accountable institution bears such responsibility. In most instances, a compliance officer must also be appointed.
Compliance by these newly added institutions will be on the radar of the FIC. According to a media statement released by the FIC on 30 November 2022:
“In the first 18 months from the date of commencement of the amendments, the FIC and supervisory bodies will focus on entrenching [FICA] 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 [FICA] during the transitional 18-month period.”
Non-compliance with FICA can lead to hefty penalties, including imprisonment for a period not exceeding 15 years or to a fine not exceeding ZAR100-million.
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Read the original publication at ENSafrica.