MAIN IMAGE: Johlene Wasserman – director of Community Schemes and Compliance at Van Deventer Dowlath & Marx Incorporated
Van Deventer Dowlath & Marx Incorporated
The grace period for South African estate agents is officially over.
That’s the warning from Johlene Wasserman of Van Deventer Dowlath & Marx Incorporated, director of Community Schemes and Compliance, who says: “In August 2024, the Financial Intelligence Centre (FIC) Appeal Board upheld a R266,000 penalty against Capital Point Properties for a simple reason: that their compliance existed only on paper. With the FIC now reporting individual sanctions as high as R7.8 million, the message to property practitioners is blunt: if your systems don’t work in practice, your business doesn’t legally exist.”
Regulators aren’t asking for promises, she adds. “They’re demanding proof. If you can’t produce a timestamped audit trail during an inspection, they are going to assume that the work wasn’t done.”
Appeal Board ruling
This tougher approach gathered momentum after the Capital Point Properties ruling, she says, and it’s indicative of a growing move towards stricter market enforcement. “When penalties reach this level, the message is clear: if an RMCP is not working in practice, it’s not compliant.
Inspections and records
Wasserman says the Fidelity Fund Certificate (FFC) and the Property Practitioners Regulatory Authority now expect agencies to provide immediate access during inspections to their RMCP, agency risk assessments, client due diligence files, source-of-funds checks, beneficial ownership verification, and evidence of sanctions and politically exposed person screening.
Further, agencies also need to be able to produce suspicious transaction reports, compliance registers and training records without delay.
“Inspectors want the documents, timestamps, screening results and audit trail,” she notes. “If agencies can’t produce them, inspectors are likely to conclude the work was not done.”
FFC implications
Wasserman says the consequences extend beyond fines, with FIC compliance now closely tied to the issuing of Fidelity Fund Certificates. Practitioners who cannot show that their RMCP is functional, reporting is current, and records are complete risk delays or downright refusal of their FFCs.
“Without an FFC, an estate agent cannot legally operate. This is the issue that every principal and agent should be watching. If FIC compliance is not in order, an FFC is at risk, and is their income.”
Risk and compliance returns
The requirement to submit risk and compliance returns through the PPRA creates an additional compliance risk, she adds, since incomplete, inaccurate or missing submissions are likely to trigger separate enforcement action.
RCRs are not a box-ticking exercise. They’re a declaration of your compliance status. So, whether you submit incorrect information or nothing at all, you’re telling the regulator that your systems aren’t in place.”
What a compliant RMCP must show
According to Wasserman, a compliant RMCP must be tailored to the agency to demonstrate how it manages financial crime risk in practice, including client onboarding, identity and source-of-funds verification, risk-based transaction monitoring, internal escalation, and suspicious activity reporting.
“If your RMCP isn’t being applied daily, it doesn’t meet the legal standard,” Wasserman cautions. “The FIC wants to see that your staff understand it, that your processes reflect it, and that your records prove it.”
Regulatory warning
Regulators have made their position very clear, Wasserman stresses: agencies without a functional RMCP face enforcement action, those without proper records face financial penalties, and those that fail to meet FIC obligations risk losing their FFCs.
“This is no longer about preparing for future regulation,” she says. “It’s about staying legally operational. Agencies that haven’t yet implemented a functional RMCP and aligned their reporting obligations are now exposed to enforcement action.”
Her advice to practitioners is to immediately read recent FIC media releases and appeal board decisions, which she says will provide them with guidance on the regulator’s current approach.
“Compliance is not optional,” Wasserman states. “It can determine whether an agency continues trading or faces sanctions.”
