It is “that time” of the year again, during the 2023/24 financial year, the Financial Intelligence Centre (FIC) delivered on the eight strategic action items, outlined in its annual report, which South Africa has committed to resolving by January 2025. From Directive 6 & 7 reminders and penalties being issued, to the UBO threshold changing, we thought we would highlight some of these updates, facts and learnings that have been mentioned in the Annual Report.

FIC's 2023/2024 Performance:

• The FIC contributed to the recovery of R98.5 million in criminal proceeds during 2023/24 by providing financial intelligence to law enforcement and other competent authorities for their investigations, prosecutions and applications for asset forfeiture. Whilst the FIC does not conduct investigations, they produced 3 924 intelligence reports.
  
  
• They contributed to the reforms on beneficial ownership and the national beneficial ownership framework was implemented and became functional in less than a year.
  
  
• They hosted and presented 48 compliance awareness events that reached 32 914 attendees.
  
  
• Contributing to South Africa’s collective effort to strengthen the effectiveness of its Anti-Money Laundering (AML) and (Combatting the Financing of Terrorism) CFT regime and resolve deficiencies identified in the (Financial Action Task Force) FATF mutual evaluation report, 51 020 institutions were registered with the FIC and 558 FIC Act inspections had been conducted (as of 31 March 2024).
  
  
• The FIC exceeded the targeted number of risk-based compliance review reports issued and successfully addressed FATF-identified recommended actions.
  
  
• A 100 percent success rate was achieved in matters referred for administrative sanctions.
  
  
• During the year under review, the 51 020 institutions registered on the FIC database submitted about 7.4 million (2022/23: 5.3 million) regulatory reports.
  
  
• Guidance products issued in 2023/24 included:
  
  • Public Compliance Communication (PCC) 57(previously draft 120) on the new Schedule item 22 accountable institution referred to as Crypto Asset Service Providers (CASPs).
  • PCC 6A (previously draft PCC 6A) on the new Schedule item 2 accountable institution, referred to as Trust and Company Service Providers (TCSPs).
  • PCC 47A (previously draft PCC 47A) on the new Schedule item 1 accountable institution referred to as Legal Practitioners.
  • PCC 5D (previously draft PCC 5D) on registration with the FIC in terms of section 43B of the FIC Act.
  • PCC 44A (previously draft PCC 44A) on targeted financial sanctions aimed at counter terrorist financing and counter proliferation financing risks.
  • PCC 58 (previously draft PCC 119) on the new Schedule item 20 – referred to as High Value Goods Dealers (HVGD).
  • Draft PCC 121 beneficial ownership on the application of section 21B and interpretation of beneficial ownership – consultation was completed.

• The non-profit organization sector risk assessment was created which was a first for South Africa. The country received technical assistance from the European Union Anti-Money Laundering / Counter Terrorist Financing (AML/CFT) Global Facility (EU Global Facility) to conduct its first NPO Terrorist Financing Sector Risk Assessment during the financial year.
  
  
• The FIC issued Directive 6 on 31 March 2023, which placed an obligation upon Designated non-financial businesses and professions (DNFBPs) (these include; legal practitioners, trust and company service providers, estate agents and gambling institutions), to complete and submit their RCRs by 31 May 2023. On 31 March 2023, the FIC also published Directive 7, placing an obligation on credit providers, the South African Postbank, high-value goods dealers, The South African Mint Company and crypto asset service providers to submit their RCRs by 31 July 2023. The information contained in the RCRs assists the FIC in understanding the institutions and their levels of risk exposure, so that appropriate risk-based approach supervision may be applied. Institutions that had not submitted their returns by the due dates were automatically deemed to be in a state of non-compliance and of high risk. However, as the online portal remained active, institutions continued to submit their RCRs. By 31 March 2024, 20 517 institutions registered with the FIC had submitted their risk and compliance returns.
  
  
• The FIC conducted 558 inspections in 2023/24. Of these inspections, 269 specifically scrutinised the non-submission of RCRs. It was found that 191 institutions were non-compliant with the requirement to submit an RCR and issued 186 such notices to non-compliant institutions. Of these 186 notices issued, 83 remediated their non-compliance by submitting the RCR, 18 paid fines as admission of non-compliance and the balance filed representations to request the FIC to reconsider the financial penalty. These matters will be presented to the FIC’s adjudication panel for consideration.
  
  
• The remaining inspections were targeted at one or more of the other compliance obligations under FICA. The results of these inspections show that the inspected institutions were largely non-compliant in the following areas:
  • Failure to develop an RMCP, or implement an existing RCMP
  • Failure to timeously register with the FIC or to update registration information
  • Failure to properly identify and verify beneficial owners of legal entities and trusts
  • Failure to provide confirmation that clients were screened against the United Nations Security Council’s targeted financial sanctions lists (TFS List).

SA’s Effort to Exit the FATF Grey List

And for those of you asking about our (Financial Action Task Force) FATF Progress: South Africa has also submitted three progress reports thus far on the actions to address its strategic deficiencies in the ICRG process. By October 2023, South Africa had largely addressed two of the 22 action items in its action plan, both ahead of the expiry dates for these action items. The country had the opportunity to discuss its third progress report in a face-to-face meeting with the FATF Africa-Middle East Joint Group, which took place between 7 and 15 January 2024 in Abu Dhabi, in the United Arab Emirates.

If you haven't yet, we encourage you to take a closer look at the detailed annual report issued by the FIC. 

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