Update: FICA

The Financial Intelligence Centre Act38 of 2001 came into effect on the 1st of July 2003. This Act was introduced to curb financial crime, such as money laundering, tax evasion, and terrorist financing activities. The FIC Act aligns South Africa with the rest of the world in terms of legislation placed to monitor monetary movements sourced from illegal practices so as to reduce criminal activities.

However, as of 2 May 2017, the Financial Intelligence Centre Amendment Act 1 of 2017 was published in the Government Gazette 40821. All finance institutions are required to comply and familiarise themselves with the provisions stipulated in the FIC Amendment Act. Amendments were made under this Act with the intent to strengthen the capacity to prevent financial crimes and to discipline such crimes.

Key Elements

The key elements of this act include executing a risk-based approach in the Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regime and strengthening them through a more consultative approach based on partnerships between key stakeholders in both the public and private sectors as the risk of money laundering and terrorist financing can vary as per individual, business sector and within sectors. According to the South African National Treasury, the FIC Amendment Act aims to achieve its objectives by making the risk‐based approach the core of the AML and the CFT regime. It also looks at refining coordination and collaboration to ensure more effective preventive and better enforcement measures.

New concepts

The amendment has introduced new concepts and approaches to the application of the FIC Act, such as a full range of customer diligence requirements, which are fixated on understanding consumers more. It also introduces beneficial ownership, which requires institutions to understand the likely persons who ultimately own or exercise control over legal entities.

Different effective dates of the act

The implementation of the Amendment will commence on different dates as per the respective provisions, the first provision commenced of the 13th June 2017, and the next one is expected to be on the 2nd October 2017.

These provisions, which give effect to the new concepts and approaches, will entail alterations to the existing regulations and exemptions under the FIC Act, as well as staff training and major changes to systems by supervisors, the Office of the Chief Procurement Officer and accountable institutions.

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