The Financial Intelligence Centre (FIC) Act imposes obligations on accountable and reporting institutions and other persons to report certain transactions to the FIC. The FIC obtains financial intelligence and other data from these reports which are filed in accordance with various sections of the FIC Act.
Public Compliance Communication (PCC) 50 provides guidance to reporters on certain measures required for the mitigation of loss of intelligence data due to the Centre, where a report was ought to be filed and the reporter has failed to file this report with the Centre, or where a defective report is filed with the Centre. In both these instances the reporter is required to remediate the reporting failure as soon as possible. A defective report includes a rejected report owing to validation failures or where the data submitted in the report is inaccurate or false. In addition, this PCC provides guidance to reporters on the prevention, remediation and mitigation measures relating to reporting failures and gives clarity on the Directive 3 of 2014 process.
PCC 50 consists of two parts namely Part A: Non-submitted report and Part B: Defective report.
Part A: Non-submitted Report
A report that a reporter ought to have filed to the Centre but failed to do so, is considered as a non-submitted report. Where a reporter becomes aware of a non-submitted report, the reporter must mitigate the loss of intelligence data to the Centre. The Directive 3 process must be followed in which the reporter must notify the Centre of loss of intelligence data due to a non-submitted report, how this occurred, what the remediation action plan is and ensuring the non-submitted report is filed with the Centre. All Directive 3 notifications must be sent to the Executive Manager: Compliance and Prevention at Directive3@fic.gov.za.
Upon completion of the Directive 3 process, the reporter must provide the Centre with a formal, written close out report detailing the steps taken to remediate the non-submitted reports and prevent a re-occurrence of the reporting failure. Where a reporter fails to notify the Centre of a non-submitted report, or where a reporter fails to remediate a report according to the remediation plan, the reporter has not complied with its duty in terms of Directive 3 and may be subject to administrative sanctions in terms of the FIC Act.
Part B: Defective Report
Failure to file a report with the correct or complete prescribed particulars may result in either a report failing the validation process and being rejected on the Centre’s reporting platform, or a report being received by the Centre with incomplete or false data. In both these cases the defective report must be remediated. The reporter is required to remediate a defective report either as soon as the reporter is notified that the report is rejected or becomes aware that the report contains inaccurate or incorrect data. This process is set out in goAML notice 4A.
- Systems rule failure and rejected report
A report that is submitted and then rejected by the reporting system because it fails the validation requirements that apply to the specific report, is not considered to be submitted to the Centre, and the reporter has not discharged the reporters reporting obligation. A rejected report must be remediated and re-submitted to ensure adequate submission.
The reporting entity must resubmit the corrected report within the initial prescribed period as set out in the MLTFC regulations, that apply to that report type. There is no additional time provided to a reporter for the final submission of a report. The reporter must formally, in writing, confirm to the Centre when the remediation process has been completed.
- Report content failure
A reporter that submits a report that is accepted by the reporting system, where the reporter has captured inaccurate or false information in this report to bypass the reporting system validation rules, has not discharged the reporters reporting obligation. The reporter must remediate this report by correcting the information, using the correct prescribed format, and submitting the remediated report on the reporting platform.
Recommendations to limit reporting errors
- Information required in terms of the MLTFC regulations: Reporting entities must adhere to the FIC Act together with the MLTFC Regulations when submitting reports to the Centre, as well as the applicable prescribed reporting platform. Chapter 4 of the MLTFC Regulations sets out the requirements that apply to reporting.
- Pre-validation of report information: The Centre recommends that reporters conduct pre-validation of all reports before filing reports with the Centre. This is to help prevent report failures or rejections. This will also ensure that prescribed and accurate information is reported to the Centre within the prescribed format and time period. Pre-validation includes the reporter checking whether the report includes all mandatory information and that which is readily available as prescribed for the report type in terms of the MLTFC Regulations.
- Quality reviews and assurance processes: Reporting entities should follow a multi-disciplinary approach that will enable them to apply adequate quality control measures and implement assurance processes in order to identify potential issues relating to the submission of a report to the Centre.