How should a business implement the FIC Act amendments?
FIC Amendment Act
The Financial Intelligence Centre Act was amended by the Financial Intelligence Centre Amendment Act (please click here for a link to the FIC Act). The provisions of the new act were released in intervals and the FSCA afforded accountable institutions until the 2nd of April 2019 to fully implement these new provisions.
During April 2019 the FSCA then issued a general communication to all FSP’s in relation to the implementation of these new provisions and advised on the supervisory approach the FSCA will follow when conducting onsite visits.
The FSCA gave clear guidance on which measures it expects accountable institutions, such as FSP’s, to have in place. The following gives further guidance on how this should be done:
Develop and Implement an RMCP:
A Risk Management and Compliance Programme (RMCP) must be developed that clearly demonstrates the processes to deal with money laundering and terrorist financing ( ML/TF) risks;
The RMCP must be developed in accordance with Section 42 of the Act;
The RMCP must at least provide for the following:
The process the FSP follows to identify and assess the ML/TF risks for the FSP;
Risk scales used to classify categories of clients;
Risk classification of existing clients.
Approve the RMCP
The RMCP must be approved by either the board of directors, senior management or other person or group of persons with the highest level of authority in accordance with Section 42(2B);
Implement the RCP
The RMCP must be implemented in terms of customer due diligence and record-keeping requirements for clients onboarded from the 2nd of October 2017;
Existing clients are those clients an FSP on boarded prior to the 2nd of October 2017. The FSCA expects an FSP to have started with the process to classify these clients according to the risk and if a client or a category of client is rated high risk it must demonstrate that it obtained additional information from the client as required by the FIC Act or RMCP and monitor the high risk clients transactions.
5. Implementation of targeted financial sanctions
FSP’s was given a grace period until the 31st of May 2019 to become compliant with sections of the FIC Act which deals with targeted financial sanctions (Section 26A-26C). The FSCA expects FSP’s to have the following measures in place:
How the FSP will identify if persons or entities are listed in a resolution of the United Nations Security Council;
Policies and guidelines on how to deal with property, financial services of clients listed on UN lists;
Policies and procedures to report transactions related thereto.
Does the FSCA conduct onsite visits?
Yes the FSCA is conducting onsite visits and has recently published information on the outcome of onsite visits.
Administrative penalties were issued against Financial Services Providers respectively for
Failure to develop, document, maintain and implement a programme for anti-money laundering and counter-terrorist financing risk management and compliance (RMCP);
The RMCP implemented does not comply with the provision of Section 42(2) of the FIC Act; or
Failure to provide ongoing training to its employees to ensure that employees are able to comply with the provisions of the FIC Act and the RMCP.
Please see herewith the administrative penalties issued by the FSCA:
It is thus imperative that FSP’s ensure that it has implemented an RMCP according to the provisions of the Act and adhere to provisions of the FIC Act as amended.
Should you require any further information you are welcome to contact our offices for information.