IS YOUR BUSINESS AN ACCOUNTABLE INSTITUTION UNDER THE AMENDED FINANCIAL INTELLIGENCE CENTRE ACT?

Amendments to The Financial Intelligence Centre Act and Regulations came into effect on 19 December 2022.

The amendments affect accountable institutions listed in Schedule 1, supervisory bodies listed in Schedule 2, and reporting institutions listed in Schedule 3 of the FIC Act. Amendments to items listed in Schedule 1 broaden the application of the FIC Act by including additional categories of institutions and businesses under its scope. It is important for businesses to familiarise themselves with these new amendments and to ascertain whether they are required to comply with the amended legislation.

WHO NEEDS TO COMPLY / ACCOUNTABLE INSTITUTIONS:

In terms of FICA, the following persons (businesses) are “accountable Institutions” under the revised Schedule 1, which reads as follows:

1. 1. A person who is admitted and enrolled to practise as a legal practitioner as contemplated in section 24(1) of the Legal Practice Act, 2014 (Act 28 of 2014) and who is–
      • (i)    an attorney (including a conveyancer or notary) practising for his or her own account as contemplated in section 34(5)(a) of that Act; or
      • (ii)   an advocate contemplated in section 34(2)(a)(ii) of that Act.
   2. A commercial juristic entity, as contemplated in section 34(7) of the Legal Practice Act,2014.
2. 1. A board of executors or a trust company or any other person that invests, keeps in safe custody, controls or administers trust property within the meaning of the Trust Property Control Act, 1988 (Act 57 of 1988)] person who carries on the business of preparing for, or carrying out, transactions for a client, where–
      • (i) the client is assisted in the planning or execution of–
        • (aa) the organisation of contributions necessary for the creation, operation or management of a company, or of an external company or of a foreign company, as defined in the Companies Act, 2008 (Act 71 of 2008);
        • (bb) the creation, operation or management of a company, or of an external company or of a foreign company, as defined in the Companies Act, 2008; or
        • (cc) the operation or management of a close corporation, as defined in the Close Corporations Act, 1984 (Act 69 of 1984).
   2. A person who carries on the business of–
      • (i)  acting for a client as a nominee as defined in the Companies Act, 2008; or
      • (ii) arranging for another person to act for a client as such a nominee.
   3. A person who carries on the business of creating a trust arrangement for a client.
   4. A person who carries on the business of preparing for or carrying out transactions (including as a trustee) related to the investment, safe keeping, control or administering of trust property within the meaning of the Trust Property Control Act, 1988 (Act 57 of 1988).
3. An estate agent as defined in the Estate Agency Affairs Act, 1976 (Act 112 of 1976).
4. An authorised user of an exchange as defined in the [Securities Service Act, 2004 (Act 36 of 2004)] Financial Markets Act, 2012 (Act 19 of 2012).
5. A manager registered in terms of the Collective Investment Schemes Control Act, 2002 (Act 45 of 2002), but excludes managers who only conduct business in Part VI of [the Collective Investment Schemes Control] that Act [(Act 45 of 2002)].
6. A person who carries on the “business of a bank” as defined in the Banks Act, 1990 (Act 94 of 1990).
7. A mutual bank as defined in the Mutual Banks Act, 1993 (Act 124 of 1993).
7a. A co-operative bank as defined in the Co-operative Banks Act, 2007 (Act 40 of 2007).
8. A person who carries on a “[long-term] life insurance business” as defined in the [Long-Term Insurance Act, 1998 (Act 52 of 1998)] Insurance Act, 2017 (Act 18 of 2017), but excludes reinsurance business as defined in that Act.
9. A person who carries on the business of making available a gambling activity as contemplated in section 3 of the National Gambling Act, 2004 (Act 7 of 2004) in respect of which a license is required to be issued by the National Gambling Board or a provincial licensing authority.
10. A person who carries on the business of dealing in foreign exchange.
11. A person who carries on the business of dealing in foreign exchange.
    1. A person who carries on the business of [lending money against the security of securities] a credit provider as defined in the National Credit Act, 2005 (Act 34 of 2005).
    2. A person who carries on the business of providing credit in terms of any credit agreement that is excluded from the application of the National Credit Act, 2005 by virtue of section 4(1)(a) or (b) of that Act.
12. A person who carries on the business of a financial services provider requiring authorisation in terms of the Financial Advisory and Intermediary Services Act, 2002 (Act 37 of 2002), to provide advice [and] or intermediary services in respect of the investment of any financial product (but excluding a [short term insurance contract or policy referred to in the Short-term Insurance Act, 1998 (Act 53 of 1998)] non-life insurance policy, reinsurance business as defined in the Insurance Act, 2017 (Act 18 of 2017) and [a health service benefit provided by] the business of a medical scheme as defined in section 1(1) of the Medical Schemes Act, 1998 (Act 131 of 1998.))
13. A person who issues, sells or redeems travellers’ cheques, money orders or similar instruments.
14. The South African Postbank Limited referred to in section [51] 3 of the [Postal Services Act, 1998 (Act No. 124 of 1998)] South African Postbank Act, 2010 (Act 9 of 2010).
16. [The Ithala Development Finance Corporation Limited.]
19. A person who carries on the business of a money [remitter] or value transfer provider.
20. A person who carries on the business of dealing in high-value goods in respect of any transaction where such a business receives payment in any form to the value of R100 000,00 or more, whether the payment is made in a single operation or in more than one operation that appears to be linked, where “high-value goods” means any item that is valued in that business at R100 000,00 or more.
21. The South African Mint Company (RF) (Pty) Ltd, only to the extent that it distributes non-circulation coins in retail trade and where in respect of such transactions it receives payment in any form to the value of R100 000,00 or more, whether the payment is made in a single operation or in more than one operation that appears to be linked.
22. A person who carries on the business of one or more of the following activities or operations for or on behalf of a client:
    1. Exchanging a crypto asset for a fiat currency or vice versa;
    2. exchanging one form of crypto asset for another;
    3. conducting a transaction that transfers a crypto asset from one crypto asset address or account to another;
    4. safekeeping or administration of a crypto asset or an instrument enabling control over a crypto asset; and
    5. participation in and provision of financial services related to an issuer’s offer or sale of a crypto asset,
       where “crypto asset” means a digital representation of perceived value that can be traded or transferred electronically within a community of users of the internet who consider it as a medium of exchange, unit of account or store of value and use it for payment or investment purposes, but does not include a digital representation of a fiat currency or a security as defined in the Financial Markets Act, 2012 (Act 19 of 2012).
23. A clearing system participant as defined in section 1 of the National Payment System Act, 1998 (Act 78 of 1998) that facilitates or enables the origination or receipt of any electronic funds transfer and or acts as an intermediary in receiving or transmitting the electronic funds transfer.

COMPLIANCE OBLIGATIONS – WHAT IS EXPECTED OF ACCOUNTABLE INSTITUTIONS

New as well as existing categories of institutions and businesses listed as accountable institutions are required to fulfil certain statutory and regulatory obligations​, including:

• Register with the Financial Intelligence Centre
• Submit regulatory reports to the Financial Intelligence Centre
• Implementing a risk-based approach to customer due diligence
• Develop a risk management and compliance programme
• Record-keeping
• Implement a compliance function and appoint a person responsible for compliance (ComplianceOfficer)
• Train employees on how to comply with the Act

The amendments to Schedule 1 took effect on the 19th of December 2022 and the consequent obligations on accountable institutions are in effect and new accountable institutions are required to register with the Financial Intelligence Centre within 90 days from the effective date (above), i.e., 19 March 2023.  If your business qualifies as a new accountable institution, and you have not yet registered with the Financial Intelligence Centre as such, you should do so as soon as possible.

Should you require additional information or need assistance in determining the impact of the amendments to FICA on your business, please contact FHBC on lorraine@fhbc.co.za.