Amendments to the Financial Intelligence Centre Act, 2001 (“FICA”) (defining accountable institutions) were published on 29 November 2022. These will come into effect on 19 December 2022, ahead of the possible grey-listing of South Africa.

The following entities (amongst others) will now become accountable institutions:

  • a person who carries on a life insurance business as defined in the Insurance Act, 2017. This excludes a reinsurance business, as defined in this Act;
  • a person who carries on the business of a credit provider, as defined in the National Credit Act, 2005;
  • 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 because the credit is being provided to certain juristic persons, the state or an organ of state;
  • 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 to provide advice or intermediary services in respect of the investment of any financial product (but excluding a non-life insurance policy, reinsurance business as defined in the Insurance Act, 2017 and the business of a medical scheme as defined the Medical Schemes Act, 1998;
  • a person who carries on the business of a money or value transfer provider;
  • 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 ZAR100 000 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 ZAR100 000 or more;
  • A person who carries on the business of one or more of the following activities or operations for or on behalf of a client:
    • exchanging a crypto asset for a fiat currency or vice versa;
    • exchanging one form of crypto asset for another;
    • conducting a transaction that transfers a crypto asset from one crypto asset address or account to another;
    • safekeeping or administration of a crypto asset or an instrument enabling control over a crypto asset;
    • participation in and provision of financial services related to an issuer’s offer or sale of a crypto asset; and
    • a clearing system participant as defined in section 1 of the National Payment System Act, 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.

No longer will these entities merely claim to perform customer due diligence or monitor whether transactions may involve money laundering or unlawful activities - the obligations imposed on accountable institutions go way beyond this and the effective date is only two weeks away.

Compliance by these newly added institutions will be on the radar of the Financial intelligence Centre (“FIC”).

FICA places various obligations on accountable institutions. These include, the obligation to:

  • register as an accountable institution with the FIC;
  • formulate and implement a Risk Management and Compliance Programme (“RMCP”);
  • appoint a Money Laundering Control Officer;
  • train employees;
  • identify and verify new clients;
  • ongoing due diligence in respect of existing clients;
  • keep records of identities of clients and of transactions entered into with clients;
  • sanction screening; and
  • report certain transactions to the FIC.

The board of directors of an accountable institution which is a legal person with a board of directors, or the senior management of an accountable institution without a board of directors, must ensure compliance by the accountable institution and its employees with the provisions of FICA and its RMCP.

Non-compliance with FICA can lead to hefty penalties, including imprisonment for a period not exceeding 15 years or to a fine not exceeding ZAR100 million.