1 April 2019 is deadline for FIC compliance
The EAAB is the supervisory body that must ensure the property industry adhere to the requirements of the Act
In less than 5 months estate agents could face penalties of up to R10 million when 1 April 2019 rolls by and they are found to be non-compliant with the Financial Intelligence Centre (FIC) Amendment Act, yet the Estate Agency Affairs Board (EEAB) has yet to release the study material to instruct them on the Act and its implications for the industry.
Industry body Rebosa in a recent newsletter stated that they had a meeting with the Financial Intelligence Centre and the Estate Agency Affairs Board (EAAB) on 26 October where the 1 April 2019 was confirmed as the final date for compliance. No extensions will be given.
At least this ends the speculation as to when the sections of the Amendment Act applicable to the property industry would to be enforced.
Background on the Act
The Financial Intelligence Centre Act (FICA) was passed into law in 2011 and was brought in to prevent the abuse of the financial system (e.g. money laundering, fraud or tax evasion). Together with banks and attorneys, the Act included estate agents among the accountable institutions that must validate and verify their client’s identity before a business transaction is done.
The EAAB is the supervisory body that must ensure the property industry adhere to the requirements of the Act and must take all steps required to prevent, identify and report on money laundering and terrorist financing activities in the estate agency sector.
In April 2017 the FIC Amendment Act was passed with certain sections of the Act that became effective that same year. The FIC together with National Treasury, the South African Reserve Bank and the Financial Services Board published Guidance Note 7 where the implementation of the FIC Act as amended was explained to regulatory bodies such as the EAAB.
Latest on EAAB’s promised study material
In February this year the EAAB promised that the Continuing Professional Development (CPD) programme for 2018 would include “an in-depth presentation on the Financial Intelligence Centre Act, as amended, and the implementation by accountable institutions of its requirements”. However, with 2018 almost at an end the EAAB’s promised study material to educate estate agents on the implications of the Act for the property industry is yet to be released.
Commenting on the matter, EAAB spokesperson Bongani Mlangeni said the EAAB has prepared “extensive study material for estate agents on the implementation of the new risk-based provisions of the FIC Act”, however it hasn’t been released yet. According to Bongani a copy of the draft study material was sent to all members of the Multi-Stakeholder Group, established by the EAAB for closer liaison with the estate agency sector, but no inputs to the material were received. It has been independently confirmed that these emails were only sent a few weeks ago in October this year.
Mlangeni said the study material is currently being assessed by FIC and once approved will be shared with the industry. He added that the centre has agreed to do so to even though it isn’t their mandate and that the EAAB greatly appreciates the assistance the FIC is providing in this respect.
Although he didn’t give a date when the material will be made available, Mlangeni promised as soon as the material is finalised it will be placed on the EAAB website. It will then also be added to the study material for the Professional Designation Examination for principal estate agents. EAAB also intends compiling a template with regards to the risk management and compliance programme (RMCP) required by the Act for use by estate agents to ensure that they meet all the compliance obligations of the Act. This will be done once the proposed study material has been approved by the Financial Intelligence Centre, Bongani said.
The study material on the FIC Act are also to be included in the 2019 CPD programme.
According to a notice on the EAAB website some principals will receive email notification that they were selected to complete an electronic questionnaire to assess their compliance. The questionnaire will be available on the EAAB website from 1 December.
The FIC indicated that any comment from them on the matter to Property Professional will take two to three weeks to be approved for publication.
Penalties and requirements
Considering that hefty penalties will apply from 1 April next year for non-compliance, it is essential for estate agents to acquaint themselves with the Act and how it affects them. The FIC takes compliance with the Act very seriously and estate agents can be fined up to R10 million for non-compliance. As the supervisory body, the EAAB may also impose disciplinary measures for non-compliance. Rebosa says this might well range from reprimands to cancellation of FFC’s.
At least, thanks to industry bodies such as Rebosa, estate agents didn’t have to sit around and nervously watch the months tick by before they could learn more on what the compliance with the Act required from them. In October last year Rebosa developed an RMCP template with input from their legal experts and it is available on their website.
The Rebosa newsletter also lists the following as being required in respect to the FIC Act:
Section 28A (3) of FICA – List 1267
Requires accountable institutions to screen their clients against List 1267 – “Lists of Persons and Entities subject to Targeted Financial Sanctions under the United Nations Sanctions Ordinance” accessible at: https://www.un.org/sc/suborg/en/sanctions/1267/aq_sanctions_list
When verifying a client you can access the website to ensure they are not on the UN sanctions list.
Schedule 3A of FICA – Domestic Prominent Influential Persons (“DPIPs”)
The various types of DPIP are listed in schedule 3A of FICA, and one such type is the senior officer of a company that does business with the government of a value higher than a prescribed amount per annum. Said amount has yet to be gazetted. When verifying a client it is important to ascertain if they are a DPIP.
Section 21 (1) (a) – Duty to Identify Clients
Requires an accountable institution to establish and verify its client’s identity. How this is done is a matter left to the accountable institution’s discretion, which must be exercised within the parameters of a FICA-compliant RMCP. Information that might be used to verify a client’s basic identifying attributes are name, date of birth, address and identity or passport number.
In conclusion, the EAAB has indicated to Rebosa that, once their study material is approved by FIC, they will host nationwide roadshows to educate estate agents on the Act’s compliance obligations. The study material will also form part of the CPD curriculum for 2019.
Do you have any questions on what you have to do to ensure you are compliant with regards to the Financial Intelligence Centre Amendment Act? Email email@example.com.