FICA was adopted in 2001 and has since been amended a number of times to ensure that South Africa’s Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) regulatory regime is in line with international standards as set out by the Financial Action Task Force (FATF) and reflects South Africa’s continued commitment to combating money laundering (ML) and terrorist financing (TF).
In November 2022, the South African Parliament amended the Schedules in FICA. The amendments relate to the classification of accountable institutions listed in Schedule 1, supervisory bodies listed in Schedule 2, and reporting institutions listed in Schedule 3 of FICA.
In terms of Schedule 1, the changes will increase the number of businesses included as Accountable Institutions resulting in those businesses now having to comply with FICA. This will have an operational impact on those newly classified businesses since there are identification, validation, monitoring and reporting obligations which they must now comply with.
High level obligations overview
FICA requires Accountable Institutions to fulfill certain obligations. Below, we have provided a summary of the obligations which are required in order to achieve compliance with FICA:
- Register with the Financial Intelligence Centre (FIC) as an Accountable Institution.
- Formally appoint a money laundering control officer and communicate the identity of this person to the FIC.
- Undertake a formal risk assessment of your business to identify ML and TF risks.
- Implement a risk-based approach to combating and money laundering terrorist financing and PF.
- Train employees on FICA compliance and ML, TF risk exposure.
- Conduct customer identification and verification including identity verification to a reliable and independent source such as the South African Department of Home Affairs.
- Conduct customer due diligence, including identifying the source of income for specific customers such as cash transactions.
- Monitor all transactions for ML and TF risks
- Suspicious and unusual transactions reporting to the FIC
- Cash transactions reporting to the FIC.
What to do now?
Should you be unsure as to whether or not you are required to comply with FICA, we suggest the following:
- Determine whether your business is now an Accountable Institution.
- Undertake a risk assessment to understand your compliance obligations (as required by Directive 6 & 7).
- Determine implementation requirements
- Decide on self-staffing the capacity or outsourcing
Morningside Consulting can advise you on your compliance strategy and we also offer an outsourced onboarding compliance solution which provides customer identification and verification, customer due diligence, staff training and ongoing customer monitoring to enable reporting to the FIC.
Get in touch!
Dr Pete Mhlanga
Financial Crime Subject Matter Expert | Risk Advisory
petemhlanga@mctg-consulting.co.za
Tel. 083 576 5175
PhD Law (UNISA)
Risk Management | Regulatory Compliance | Corporate Governance (Wits)
Harvard Professional and Executive Program
LLM (Public International Law) UNISA)
LLB (Company Law | Tax Law) (UNISA)
