FICA deadline of 2 April getting close
MAIN IMAGE: Emil Bihl, Director of the Risk Management Division at Erasmus Motaung Incorporated
The deadline for estate agencies, among others, to meet the amendments of the Financial Intelligence Centre Act (FICA), which was introduced to counteract money laundering and the financing of terrorism, is fast approaching on 2 April.
From 2 April it will be a criminal offence for accountable institutions and individuals to be non-compliant, and upon conviction could face imprisonment of up to 15 years and fines up to R10 million for individuals and R50 million for companies.
The Risk Management and Compliance Programme (RMCP) amendment was introduced in October 2017 to give affected companies almost a year and a half to meet it’s requirements.
However, it was only towards the end of last year that the supervisory body for the estate agency sector, the Estate Agency Affairs Board (EAAB), released study material on compliance with the Act’s requirements on their website. The Board is currently presenting training sessions on FIC compliance across the country. Industry body Rebosa has shared the presentation on their website – it can be accessed here
The amendments of the Financial Intelligence Centre Act, No. 38 of 2001, as amended by the Financial Intelligence Centre Amendment Act, Act 1 of 2017 (FICA) legislation, was introduced to counteract money laundering and the financing of terrorism. Emil Bihl, Director of the Risk Management Division at Erasmus Motaung Incorporated, weighs in on why companies should embrace the FICA, even if addressing compliance is an immense task and a big step for companies to take.
“These amendments, which were primed by a Mutual Evaluation Report, sought to clarify those aspects of FICA which were not being implemented correctly and which did not prevent certain acts of financial misconduct, resulting in wasted resources. One of these amendments stemmed from non-compliance to a rules-based approach, which then prompted FICA to lead companies into taking a risk-based approach, which is outlined in Section 42 of the Act,” he says.
The new amendment touches on every aspect of a business, including how a business deals with their clients, to how they are dealing with their client’s money. Bihl goes on to say, “While rules can only apply to concrete aspects of a business, risks can touch on areas that are abstract, and unforeseen especially if you approach risk to be the uncertainty on objectives. Consumers are encouraged to embrace FICA, as it offers security to all parties involved in a transaction by having a ‘watch dog’, represented by the accountable institution monitoring the transaction by identifying and managing any risks that may arise as a result of identity or any suspicious behaviour of a party to the transaction”.
“Due to the rising risks of identity theft and fraud, the Act has also brought about extended Know-Your-Customer (KYC) obligations, which now forces accountable institutions to go beyond confirming the identity of a client to give effect to the Act, and consequently protect your business and all stakeholders involved, and prompts these institutions to not only delve into the client’s business operations, but to also establish the identity of the beneficial owner. While it is easy to have a name and face by which companies can do business, verifying a juristic person is challenging and it also ventures into the Protection of Personal Information Act (POPI) territory, which is an area that law firms are ideally positioned to deal with,” cautions Bihl.
The new amendment forces accountable institutions to now be actively involved in the day-to-day risks that they, as well as their clients may face, and forces companies to be constantly aware of developments in transactions.
Bihl adds, “When you do not have buy-in from all the stakeholders involved, you will not see any efficiency in your RMCP. Stakeholders especially internal stakeholders in your company, like your HR, Sales and IT are critical control points and accountability needs to be assigned to each and every internal stakeholder”. This needs to be managed into the RMCP program. Externally, accountable institutions need to comply with FIC’s demands and also balance the interaction with its clients with an effective risk approach while treating the client fairly especially, if the client falls within the jurisdiction of the Consumer Protection Act”.
You are welcome to send questions you may have about FICA compliance or the implementation of your own Risk Management Compliance Programme to firstname.lastname@example.org