Various amendments to the Financial Intelligence Centre Act, 2001 (as contained in the Financial Intelligence Centre Amendment Act 1 of 2017) were set to come into effect on three different dates. These dates were 13 June 2017, 2 October 2017, and “dates to be determined”. In April 2018 the Financial Sector Conduct Authority (FSCA) communicated that it would afford accountable institutions until 2 April 2019 (2 October 2017 to 2 April 2019 i.e. 18 months) to fully implement the new requirements of the FIC Act as amended.
On 16 May 2019 the FSCA sent out a General Communication to Accountable Institutions regarding the FSCA’s supervisory approach to the implementation of the amendments to the Financial Intelligence Centre (FIC) Act.
The FSCA communicated that its approach post 2 April 2019 will be as follows:
1) The FSCA expects compliance by accountable institutions with section 42 of the FIC Act. This means that accountable institutions must have a Risk Management and Compliance Programme (RMCP) in place which clearly demonstrates the processes and procedures of dealing with money laundering and terrorist financing (ML/TF) risks. The FSCA will check that your RMCP contains at least the following:
– The process to identify and assess ML/TF risks in your business;
– The risk scales used within your business in order to classify categories of clients;
– Processes and procedures adopted within your business to conduct customer due diligence on different categories of clients based on their risk classification;
– Risk classification of categories of existing clients.
The FSCA has confirmed that it will advise and guide accountable institutions of any improvements to their RMCP during inspections. However, non-compliance will be taken seriously.
2) The FSCA will check that the RMCP has been approved by the board of Directors, senior management or any other person/s exercising the highest level of authority in the accountable institution.
3) There must be full implementation of the customer due diligence and record keeping requirements with regard to new clients (clients onboarded from 2 October 2017 onward).
4) For clients onboarded before 2 October 2017, the FSCA expects that accountable institutions should have started a process to align its risk classification to those clients.
5) Accountable institutions must have started a process to become compliant with the sections relating to targeted financial sanctions which came into effect on 1 April 2019. This process must be completed by 31 May 2019. In particular, accountable institutions must have started with a process to:
– Identify if persons or entities on the United Nations lists are clients of the accountable institution;
– Draft policies and guidelines on how to deal with property, financial services of clients listed on the United Nations lists; and
– Draft policies and procedures to report transactions in terms of section 28A(1)(c) and 29(1)(b)(vi) of the FIC Act.
The FSCA advised that it will begin conducting inspections in terms of the FIC Act during May 2019. The FSCA warns that any non-compliance with the FIC Act identified during an inspection will be viewed in a serious light and may lead to administrative action being taken against the accountable institution.
Accountable institutions that have not yet implemented a RMCP should do so urgently. Please contact your Compliance Officer or nearest Masthead Regional Office if you still need help.