The Financial Intelligence Centre (FIC) recently published risk assessment reports on the following sectors:
- Legal Practitioners
- Motor Vehicle Dealers
- Kruger Rand Dealers
- Estate Agents
- The Gambling sector
- Money Lenders against the Security of Securities; and
- Trust Service Providers
All sectors listed in the FIC Act need to understand the environment in which they operate and the potential risks they face. Thus, sector risk assessments are important tools for financial and non-financial institutions to help them sharpen their measures to avoid becoming victims of financial crime, such as money laundering (ML) and terrorist financing (TF).
In the compilation of these risk assessment reports, the respective sectors were evaluated, and comparative studies were conducted. The reports provide indicators to some of the methods criminals may use to exploit the vulnerabilities in the respective sectors. They also outline the risks that these sectors face in terms of the products and services offered, the types of clients in each sector, how transactions are concluded, the delivery channels utilised and geographical location statistics.
The risk assessments reveal that there are still a large number of cash transactions being concluded within the various sectors. Cash payments present risk to these sectors as criminals may disguise the true nature of how they have obtained such cash and then use it as legitimate money in the financial system.
In addition, the reports noted the number of cash threshold reports (CTRs) and suspicious and unusual transaction reports (STRs) that were filed in each sector in order to further understand the current level of risk within each of these sectors.
It is anticipated that that these risk assessment reports will empower the various sectors to identify and address any risks they might have in order to reduce their exposure to ML/TF.
The Executive Manager for Compliance and Prevention at the FIC, Christopher Malan, stated that a better understanding of potential money laundering risks will better equip the various sectors to look out for negative financial behaviour and provide timeous and detailed regulatory reports to the FIC. This is the starting point of effecting South Africa’s regime for combating money laundering and helping to ensure that our institutions have the necessary protection against crime.