Are you an Accountable Institution under FICA?
Accountable Institutions are key role players in the fight against terrorist financing, money laundering and financial crimes. With extensive obligations placed on Accountable Institutions in terms of the Financial Intelligence Centre Act 38 of 2001 (FIC Act”), businesses must know whether they qualify as an Accountable Institution based on the services they provide, particularly as the inclusion list is continuously expanding.
In terms of the FIC Act, Accountable Institutions are required to implement stringent anti-money laundering controls, report suspicious activities or behaviour and make sure that they are registered with the Financial Intelligence Centre (FIC) in terms of the FIC Act.
The FIC serves as South Africa’s primary financial intelligence authority. One of its main functions is to receive regulatory reports, transaction data, and other relevant information from Accountable Institutions. It also requires these institutions to provide details on their risk management and compliance programmes, governance, and training regarding the prevention of money laundering and terrorist financing.
In December 2022, the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act No. 22 of 2022 amended the FIC Act, making important updates based on feedback from the Financial Action Task Force (“FATF”) evaluations. In November 2022 other amendments resulted in more institutions being added to the list of “Accountable Institutions” and are now required to comply with the FIC Act requirements. Accountable Institutions that fail to comply with the requirements may face severe penalties due to non-compliance.
Below is an overview of the different types of Accountable Institutions, as defined under the FIC Act.
In terms of Schedule 1 of the FIC Act, an Accountable Institution can either be an organisation or a person that is listed in Schedule 1 of the FIC Act, which organisation or person must comply with the obligations placed on it/them in terms of the FIC Act. A few examples of an Accountable Institution are legal practitioners, trust service providers, estate agents, banks, certain accountants, credit providers, life insurance providers, high value goods dealers and crypto currency providers.
Once an entity qualifies as an Accountable Institution, it must comply with the provisions of the FIC Act and the accompanying rules and directives that apply to it. Here are examples of Accountable Institutions:
1. Legal practitioners such as attorneys/advocates, conveyancers, and notaries.
2. Business and trust service providers who assist clients to set up a business or manage trusts.
3. Estate agents.
4. Participants in South Africa’s financial markets, such as authorised exchange users and collective investment scheme managers as well as banks and other financial institutions, including mutual and co-operative banks.
5. Casinos and businesses that engage in licensed gambling activities.
6. Foreign exchange and credit providers dealing in currency transactions and lending.
7. Financial services providers, including advisors and intermediaries.
8. Businesses dealing in high-value goods and luxury items, particularly those making transactions of R100,000 or more.
9. Crypto exchange providers.
10. Participants in clearing systems and electronic systems, whether it’s processing credit card transactions, electronic transfers, or any kind of online payment.
The above should illustrate the broad range of services as well as targeted entities that qualify as Accountable Institutions. Should your business deal with some of the above services it may be important to carefully consider whether you qualify as an Accountable Institution or not.
For assistance in determining whether your business qualifies as an Accountable Institution or for guidance on compliance with the FIC Act, our Trust Office is available to help. Our team can provide expert advice on risk management, regulatory obligations, and ensuring adherence to anti-money laundering requirements. Contact us today for more information.
Disclaimer: This article is the personal opinion/view of the author(s) and is not necessarily that of the firm. The content is provided for information only and should not be seen as an exact or complete exposition of the law. Accordingly, no reliance should be placed on the content for any reason whatsoever and no action should be taken on the basis thereof unless its application and accuracy has been confirmed by a legal advisor. The firm and author(s) cannot be held liable for any prejudice or damage resulting from action taken on the basis of this content without further written confirmation by the author(s).
Source: SeymoreDuToit&Basson
