The Financial Intelligence Centre Act (FICA) sets out a regulatory framework for South Africa’s anti-money laundering and counter financing of terrorism programmes. FICA does not only help curb these illegal activities, but also helps to keep the money of South African citizens safe and aims to ensure that financial institutions know who they are doing business with.
Businesses that fall under the definition of Accountable Institution or Reporting Institution must comply with the respective requirements set out in the Act. Amongst those listed are financial services providers, attorneys, trustees and executors, estate agents, motor dealers, investment management companies, bankers and more. Similarly, all employees who are involved in the business of the accountable institution that fall within the parameters of FICA and/or who interact with clients are required to undergo training on the provisions of FICA.
The risk of non-compliance
The penalties for non-compliance vary depending on the severity of the offence and range from a public reprimand, a financial penalty, restriction or suspension of certain business activities or even imprisonment. These penalties apply not only to the company itself but may also apply to the executives or owners of a business as well as employees or individuals involved in dealings with a specific client, transaction or activity.
Why FICA Training is necessary
The Financial Intelligence Centre (FIC) is the country’s financial intelligence unit and is responsible for, amongst other things, overseeing compliance with the Act.
FICA requires Accountable Institutions to provide ongoing training to new and current employees on a regular basis. Accountable institutions should be able to demonstrate that the training took place and that it was sufficient to enable the employees to understand and comply with the FIC Act and the Accountable Institution’s Risk Management and Compliance Programme (RMCP).
By undertaking ongoing FICA training employees will be able to correctly identify different types of clients in accordance with FICA and the Regulations, they will understand the duty to keep records correctly as per the accountable institution’s internal procedures set out in their RMCP and how to correctly identify and report different reportable transactions in accordance with FICA and the Regulations.
Ongoing FICA training should include basic training on the relevant legislation, the accountable institution’s RMCP, and the more obvious warning signs in relation to money laundering. The training should be sufficient to enable the employees to understand and comply with FICA.
Further considerations to ensure FICA compliance in your business
It is important to note that FICA is not a simple add-on to your existing business procedures as it requires well thought out documented processes and procedures to a risk-based approach. To become and remain FICA compliant, Accountable Institutions should build FICA into their company’s strategy as well as normal business routine to avoid non-compliance. Further to ensuring ongoing training, businesses should:
Develop and implement a FICA Risk Management and Compliance Programme (RMCP)
Each business differs in size, structure and service offering hence it is important to develop, document, implement and maintain a risk management and compliance programme (RMCP) that is customised for the business. The RMCP is a documented plan that must set out how an Accountable Institution will deal with money laundering and terrorist financing risk management and compliance. It replaces the previous requirement to have a set of Internal Rules. The RMCP must contain policy documents, and must detail all the processes, systems and controls used for things like customer due diligence (identification and verification of clients), recordkeeping, reporting and how the risk-based approach will be applied.
Be prepared for a FIC Inspection
At some stage a business may undergo a FIC inspection which is conducted by the FSCA on behalf of the FIC. A FIC inspection is an intense and lengthy process requiring proper preparation. The typical areas that are covered and that Accountable Institutions will need to demonstrate adherence to include, your FIC registration, your governance of anti-money laundering and terrorist financing, your training relating to anti-money laundering and terrorist financing, the thoroughness and effectiveness of your FICA RMCP, your customer due diligence process, your record keeping process and more.
To ensure the business is compliant with FICA, it is recommended that Accountable Institutions appoint a compliance officer that will ensure that they keep up to date with any changes in their obligations in terms of FICA.
Let us assist you with FICA training, FICA compliance and preparation for FIC inspections
Masthead offers a wide range of services to all Accountable and Reporting Institutions including FICA training for your employees, hands-on assistance with the implementation of FICA requirements in your business and support services when preparing for a FIC Inspection.
FICA requires that all employees of Accountable Institutions be familiar with the requirements of the Act and must be provided with ongoing training. Complete this online course so you can continually assess your level of understanding as you progress through the course.
Here we will provide you with a comprehensive, up-to-date understanding of the requirements and duties as set out by the Financial Intelligence Centre and as updated by the FIC Amendment Act.
Attend this webinar for practical guidance through all the elements that need to be included in your FICA RMCP.
Perhaps you would like to gauge your readiness should you receive a FIC inspection. Attend our FIC Inspection webinar and identify any gaps ahead of time. We will take you through the process and prepare you for the typical questions you will face before, during and after a FIC inspection.
Speak to your Masthead Compliance Officer or get in touch with us for more information on our range of services to all Accountable and Reporting Institutions including FICA training for your employees, hands-on assistance with the implementation of FICA requirements in your business and support services when preparing for a FIC Inspection.