The Financial Intelligence Centre (FIC) released its 2018/19 Annual Report which contains an overview of the work that the FIC has been involved in for the past year. The Report sets out information regarding the FIC’s performance, governance, human resource management, financial information and a materiality and significance framework. The Report also contains various case studies, statistics relating to compliance inspections, sanctions issued by both the FIC and supervisory bodies for non-compliance, guidance on regulatory topics and what to expect for the 2019/20 period.
Building relationships
The FIC works with a range of partners and stakeholders and is committed to supporting the country’s efforts to fight corruption in the public and private sectors to maintain a robust financial system. In light of this, the FIC has formed relationships with government institutions and groups involved in the criminal justice system. During 2018/19 the FIC has signed memoranda of understanding (MoUs) with eight stakeholders in the criminal justice system, these are: the South African Revenue Service (SARS), the Public Protector, the Special Investigating Unit, the State Security Agency, the Insurance Crime Bureau, the Southern African Fraud Prevention Service, the South African Reserve Bank (SARB) and the Financial Sector Conduct Authority (FSCA). These formal agreements commit both parties to collaborating and co-operating to ensure that the financial system is safe, stable and sustainable for all citizens.
The FIC has also partnered with accountable and reporting institutions, such as banks, casinos and motor vehicle dealers, global bodies engaged in the combating of money laundering, financing of terrorism and proliferation of weapons of mass destruction (AML/CFT/PF) space, as well as with neighbouring countries where technical assistance is offered.
The FIC has also shared information with various commissions of inquiry during the 2018/19 period.
In the private sector, similarly, the FIC continued to deepen engagement with accountable and reporting institutions and conducted 68 on-site visits during 2018/19, which enhanced existing relationships with these businesses, and provided an opportunity for open and constructive engagement.
Some highlights from the Report on what to expect in 2019/20:
- Motor vehicle dealerships will be reclassified as accountable institutions
Large amounts of cash flow through motor vehicle dealerships every day, making these businesses prime targets for illicit financial activity. Motor vehicle dealerships are currently classified as reporting institutions in the FIC Act, which means they have certain obligations to submit regulatory reports and information to the FIC.
During 2019/20, motor vehicle dealerships will be reclassified as accountable institutions. This will place additional regulatory reporting obligations on them to ensure the FIC receives comprehensive compliance information that will strengthen the organisation’s ability to identify and combat financial crime in this industry.
- Regulatory reporting amendments
There are proposed amendments to regulations governing regulatory reporting. These are still in consultation phase for now but are expected to be finalized in the 2019/20 period. These include:
– Increasing the cash threshold amount from R24 999.99 to R49 999.99.
– Dispensing with cash threshold aggregation reporting, which required institutions to treat multiple cash transactions over a 24-hour period as a single transaction if the total cash amount exceeded the applicable threshold.
– Increasing the period for reporting Cash Threshold Reports (CTRs) to the FIC from two to three days.
- Regulating Crypto Assets
The FIC and its financial sector regulatory partners intend to formulate a policy position on the regulation of crypto asset service providers in the course of 2019/20. This will take account of international best practice and the Financial Action Task Force (FATF) Recommendations and will help ensure South Africa’s AML/CFT/PF system remains effective and up to date as technology evolves. The FIC and its partners engaged with various crypto asset businesses in 2018/19 to discuss them joining the regulatory framework. This work will continue in 2019/20.