The FSB published Volume 24 of its FAIS Newsletter on 1 September 2017, which covers:
- Regulatory Updates, addressing the Conduct of Business Report, Fit and Proper amendments and Exemption notices;
- A must-read article from the FIC Desk which contains very important information;
- Debarment of individuals who obtained fraudulent qualifications or RE results;
- Dormancy: Lapsing of a licence;
- Inheriting a licence;
- Compliance Officers and the RE exams;
- Application for exemptions.
We highlight some of the information set out in the article from the FIC Desk as this impacts all FSPs that are accountable and/or reporting institutions (‘institutions’).
Are you aware of the new FICA requirements?
Many important provisions that will affect FSPs come into effect on 2 October 2017.
- Assign a senior person to take responsibility for anti-money laundering and counter terrorist financing (AML/CTF) compliance;
- Adopt a risk-based approach;
- Develop a Risk Management and Compliance Programme which must set out the way in which the institution will apply a risk-based approach as well as the policies, procedures and systems to manage money laundering and terrorist financing (ML/TF) risks;
- Apply initial and ongoing customer due diligence measures to manage ML/TF risks;
- Ensure that there are adequate processes to establish and verify the identity of beneficial owners of legal persons, trusts and partnerships;
- Manage relationships with prominent persons both domestic and foreign;
- Keep records of all single transactions and business relationships including the due diligence conducted; and
- Provide ongoing training to all staff.
In conjunction with these provisions which will come into effect on 2 October 2017, the current Regulations must be amended and the current Exemptions withdrawn. The FIC will also provide Guidance to institutions to help them to understand what is expected and to comply with the new requirements. Draft Notices to amend the Regulations and to withdraw the existing exemptions have been published as well as Draft Guidance, all of which can be accessed on the FIC’s website, www.fic.gov.za.
Institutions must ensure that they are familiar with the requirements so that they are ready when the different implementation dates become effective.
It is recognised that institutions supervised by the FSB may not be fully compliant with the provisions which take effect on 2 October 2017. As part of the consultation process the FSB has indicated that it will circulate a survey during September to assess the state of readiness of the industry. Keep a look out for this survey and provide your support and participation.
Depending on the outcome of the survey, a transitional period may be considered to allow additional time for businesses to implement the new requirements. The FSB has committed to setting out clear expectations and milestones following engagement with the industry.
Do not delay
However, this does not mean that institutions should delay starting work on developing their internal processes and systems to comply with the new requirements as they will be expected to demonstrate progress towards full compliance at the agreed milestones and timelines.
Institutions were also reminded that they should always know who they are doing business with and must ensure that proper records of transactional activities with clients are kept at all times.