Identifying criminal activities

Financial Intelligence Centre Act

Posted by LeRoux van Wyk on 2020-09-21 in FIC Criminal Activity

Financial crime is defined as crime that is specifically committed against property. These crimes are almost always committed for the personal benefit of the criminal, and they involve an illegal conversion of ownership of the property that is involved. Financial crimes can occur in many different forms, and they happen all over the world. Some of the most common crimes facing the financial sector are money laundering, terrorist financing, fraud, tax evasion, embezzlement, forgery, counterfeiting, and identity theft. These crimes are committed every single day, and governments across the globe are constantly prosecuting financial criminals while searching for new ones.

For those who have not read through the South African Financial Intelligence Centre Act (FIC Act), it is worth taking note of Section 29 which states that – "a person who carries on a business, is in charge of a business, manages a business, or is an employee of a business" must report suspicious activity or transactions.

This person is required to report to the FIC if he/she "knows or ought reasonably to have known or suspected" a suspicious activity or transaction. It is considered that a person should reasonably have known or suspected if the conclusion is such that a reasonable and diligent person having both the general knowledge, skill, training and experience that may reasonably be expected of a person in his/her position, would have known or suspected.

So, it is therefore clear that an accountable institution or employee choosing to be complacent in order to avoid knowledge or suspicions of unlawful activities, will not escape prosecution under the FIC Act. Employees and representatives should also be aware that reportable transactions are those transactions that the relevant person knows to be suspicious or can reasonably be expected to suspect that it is a suspicious transaction.

This is important to realize because it is your responsibility to ensure that all employees are aware of basic risk management concepts and mechanisms which will enable them to identify and manage risks within their respective departments and how to identify suspicious transactions. Section 43 of the FIC Act, furthermore requires an accountable institution to "provide ongoing training to its employees to enable them to comply with the provisions of this Act and the Risk Management and Compliance Programme which are applicable to them."

We mention this because the FIC has issued case studies and indicators (FIC: Case studies and indicators collection) of criminal activity which can assist accountable institutions and employees to identify suspicious transactions and it may be worth incorporating into ongoing training thereby ensuring that employees are in a better position to identify suspicious activities or transactions.

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