The FIC Amendment Bill will introduce more responsibilities on the directors, senior management and other relevant senior staff to ensure that the accountable institution (AI) complies with the stringent measures to fight money laundering and terrorist financing (ML/TF). It is therefore important that all directors and management are properly informed of the proposed changes to ensure that the changes are implemented correctly. In order to do so successfully, the impact of the proposed changes on the institution and on the personal responsibilities of management must be evaluated. This will require accountable institutions, along with its directors and senior management, to change their current systems and processes in a way that will assist them in fulfilling their statutory duties which will also protect them from liability for non-compliance.
Responsibility to ensure compliance
The Bill also amends the provisions of Section 43 which will bring a change to the Section 43-Compliance Officer and will require AIs to appoint a person responsible for ensuring compliance by employees and the AI in its entirety. The board of directors or other members of highest authority in an AI will be required to have a compliance function to which they appoint a person/persons with sufficient competence to assist them in fulfilling their statutory obligation to ensure compliance. The amended Section 43 also introduces the requirement of ‘ongoing’ training, and no longer just ‘training’, to be provided to staff on the Act and the Risk Management and Compliance Programme. Failure by an AI to provide ongoing training or to appoint a person to ensure compliance, will be non-compliant and subject to an administrative sanction.
If an AI is not a legal person, it must appoint someone with sufficient competence to assist the person/s exercising the highest level of authority in the institution in fulfilling their statutory obligation of ensuring compliance. The only exception, where this requirement will not apply, is in the case of an accountable institution which is a sole practitioner.
Duty to ensure governance of anti-money laundering and counter terrorist financing
The Bill will introduce a new Section 42A requiring the governance of anti-money laundering and counter terrorist financing compliance.
- If an AI is a legal person with a board of directors, that board must ensure compliance by the institution and its employees with the FIC Act and its regulations and directives. A programme for anti-money laundering and counter-terrorist financing risk management must be compiled by the AI and approved by the directors.
- If an AI is a legal person without a board of directors, the duty to ensure compliance is imposed on its senior management.
- If an AI is not a legal person, the duty to ensure compliance is imposed on the person/s exercising the highest level of authority.
The proposed Section 61B, will provide that the board of directors, senior management, or both, of an AI that fails to ensure compliance with the governance duty of the proposed Section 42A will be non-compliant and subject to an administrative sanction.
The proposed changes indicate that when the Bill becomes enacted, it will impose a duty on all directors or members of senior management, as may be applicable, of accountable institutions to ensure that changes are implemented to ensure compliance. This includes ongoing training and appointing the relevant persons to assist the institution with complying with the provisions of the Act. In the next issue of our newsletter, we will be looking at what changes are proposed for conducting client due diligence and the duties it will impose on accountable institutions.