The past few months have seen a wide variety of important amendments occurring within the Anti-Money Laundering and Combating Terrorism Financing (AML/CFT) space as part of South Africa’s continued legal fight against potential "greylisting".
The General Laws Anti-Money Laundering and Combating Terrorism Financing Amendment Act (the Act) is a key legal mechanism aimed at addressing the deficiencies identified by the FATF in its Mutual Evaluation Report and recent observation period of South Africa’s AML/CFT landscape.
As part of this, some important definitions have been amended and new acronyms created in terms of the Act, which came into effect on 29 December 2022.
Domestic Prominent Influential Persons (DPIPs) and Foreign Prominent Public Officials (FPPOs) have been replaced with the acronyms Domestic Politically Exposed Persons (DPEPs) and Foreign Politically Exposed Persons (FPEPs), respectively, and have been updated as such within the DocFox watchlist screening solution to ensure that the DocFox system is always current and correct.
Importantly, DPEPs now include those individuals listed in Schedule 3A (Government Ministers, Executive Mayors of Municipalities etc) that have held a prominent or public position for a period exceeding 6 months, including in an acting position. Previously, this was limited to holding such position in the preceding 12 months, which included in an acting position exceeding 6 months.
The definition of an FPEP has been radically broadened, removing the previous 12 month time limitation such prominent public positions were capped too.
A new category has also been created, with similar wording to that of former Schedule 3A Item (b), for Prominent Influential Persons (PIPs) and to support this, a new Schedule 3C has been created for these PIPs. Such positions include individuals who hold, or have held, in the preceding 12 months, the position of a chairperson of the board of directors and audit committee, executive officer or Chief Financial Officer of a company in terms of the Companies Act, provided that the entity provides goods or services to an organ of state. Practically, this would include those entities having government contracts and tenders.
As mentioned above, time period and name changes have occurred for DPEPs and FPEPs but the public and prominent positions that fall under the scope of these acronyms remain substantially the same.
An AI’s Risk Management and Compliance Programme (RMCP) must provide for the manner that existing clients are identified as DPEPs and FPEPs.
DocFox has reached out to the Financial Intelligence Centre for advice and guidance on how DocFox and AIs can practically obtain accurate information around the persons who hold these positions, and what suitable, reliable sources of information can be used for these purposes. We have found that not all this information may be housed on open source or through the Companies and Intellectual Property Commission (CIPC), particularly for smaller entities that aren’t publicly listed.
You can read more about the other recent important FICA amendments here.
As always we aim to keep you updated with all the latest information regarding FICA and SA’s potential greylisting. Please feel free to reach out to our compliance team for any questions or concerns: compliance@docfox.co.za