The Financial Intelligence Centre (FIC) recently issued Directive 8 of 2023 which requires accountable institutions to screen their employees for competence and integrity, as well as scrutinise employee information against the targeted financial sanctions (TFS) lists, with effect from 31 March 2023.
The Directive was issued in response to the deficiency identified and the associated recommended action 18.1b as provided by the Financial Action Task Force (FATF) Mutual Evaluation Report of South Africa. This addresses the issue that there were no procedures regarding screening for employees noted in the FIC Act or the guidance notes issued by the FIC. Screening of employees must now be used as an internal control measure aimed at mitigating the risk of accountable institutions being abused by criminals who are either prospective employees, current employees or by persons that may influence employees.
The Directive requires all accountable institutions to:
- Screen prospective employees (before their appointment) and current employees for competence and integrity on an ongoing basis, in a risk-based manner.
- Scrutinise prospective employees (before their appointment) and current employees’ information against the targeted financial sanctions (TFS) lists, in order to identify, assess, monitor, mitigate and manage the risk of money laundering (ML), terrorist financing (TF) and proliferation financing (PF).
- Provide for the manner in which both types of screening above will be conducted. This must be recorded in the institution’s RMCP.
- Keep a record of the outcome of both types of screening.
- Upon request provide the FIC or other supervisory body with the records relating to the manner and outcomes of both types of screening.
Directive 8 is supported by Public Compliance Communication 55, which provides guidance on how to comply with these requirements.
Provide for the manner in which both types of screening above will be conducted. This must be recorded in the institution’s RMCP.