Schedule 1 of the Financial Intelligence Centre Act (FICA) was amended towards the end of 2022 to include Trust and Company Service Providers to the list of Accountable Institutions (AIs).
Since the announcement there has been a lot of uncertainty, specifically for Accountants and Auditors, regarding the interpretation of the meaning of Trust and Company Service Providers (TCSPs).
The FIC has recently released a guidance note (PCC 6A), providing further information and clarifying the scope and meaning of TCSPs.
An important clarification is that not ALL Accounting and Auditing firms are Schedule 1 Accountable Institutions and there is now clarification as to what makes a business a TCSP.
Companies and complex entities are a useful way for criminals to hide behind, to disguise true ownership of an asset or to try to provide a level of legitimacy to their activities or transactions.
Criminals may also try to misuse “shelf companies”, which can be formed by accountants, by seeking access to companies that have been “sitting on the shelf” for a long time. This may be to create the impression that the company is reputable and trading.
TCSPs are gatekeepers in providing potential access points into the financial system for criminals to do business with financial institutions without revealing their own identities.
A TCSP is defined in Schedule 1 of the FIC Act as:
(a) A person who carries on the business of preparing for or carrying out, transactions for a client, where-
(i) the client is assisted in the planning or execution of-
(aa) the organisation of contributions necessary for the creation, operation or management of a company, or of an external company or of a foreign company, as defined in the Companies Act, 2008 (Act 71 of 2008);
(bb) the creation, operation or management of a company, or of an external company or of a foreign company, as defined in the Companies Act, 2008; or
(cc) the operation or management of a close corporation, as defined in the Close Corporations Act, 1984 (Act 69 of 1984.)
Examples might include:
Assisting clients to raise capital or funding for the client’s business, either through advising on the sourcing of funding or liaising with donors and investors.
Assisting, drafting formation documents or facilitating the registration of a company or trust
Performing any active role in a clients business where you are making decisions for the business that steers the direction of the client’s operations or business.
It specifically excludes anything which does not make a decision for a client or impact their business operations such as bookkeeping, accounting, filing of tax returns, acting as a liquidator.
(b) A person who carries on the business of-
(i) acting for a client as a nominee as defined in the Companies Act, 2008 (Act 71 of 2008); or
(ii) arranging for another person to act for a client such as a nominee.
Examples might include:
Holding securities or an ownership interest on behalf of another person
Arranging for someone to hold securities or an ownership interest on behalf of another person
It specifically excludes a company providing custodial services on behalf of a Financial Service Provider
(c) A person who carries on the business of creating a trust arrangement for a client.
(d) A person who carries on the business of preparing for or carrying out transactions (including as a trustee) related to the investment, safe keeping, control or administering of trust property within the meaning of the Trust Property Control Act, 1998 (Act 57 of 1988).
What if I am an accountant but provide some of these services?
Then you are considered a TCSP and must register as an AI under those categories BUT you only have to FICA the TCSP related clients - not all clients.
What if I have several people employed in my team that provide these services. Must they all register?
No. Only the company needs to register – not the people performing the duties in the company.
What if I am already an AI but do TCSP work? Must I register again?
Yes. You will need to register again under the TCSP category. This is called Dual Registration and guidance can be found in PCC 5D here. A 3rd Party Services provider cannot register for clients as the registration details must be kept confidential. It is currently taking around 3 weeks for a registration to be reviewed and confirmed by the FIC. You can read more about this here.
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