The National Treasury and the Financial Intelligence Centre (FIC) have invited the public to comment on proposed amendments to schedules 1, 2 and 3 to the FIC Act.
The proposed amendments seek to strengthen the financial system and improve its reliance against abuse by money launderers and terrorist financiers.
The proposed amendments were gazetted on June 19, along with a supporting consultation paper prepared by the FIC that sets out the policy rationale for the proposed amendments.
A statement issued by the Treasury explains that the main weaknesses that have been identified in the Act relate to compliance, supervision and sanctions in respect of non-bank financial institutions, particularly designated nonfinancial businesses and professions, the tracking and sharing of information on cross-border cash flows and the pursuit of money laundering investigations.
The proposed amendments will widen the scope of application of the FIC Act by including additional categories of institutions and businesses that fall under the FIC’s scope.
This will improve the FIC’s ability to obtain information concerning the identities and financial activities of customers from a range of financial and other institutions.
In turn, this will improve the FIC’s ability to provide financial intelligence to law enforcement and security agencies, as well as policy formulating entities.
Additionally, a widened FIC Act scope will bring South Africa’s legal framework against money laundering and financing of terrorism in line with international standards recommended by intergovernmental organisation Financial Action Task Force.
CASE IN POINT
The proposed amendments will include additional financial and nonfinancial businesses, such as crypto-asset services providers.
The proposed amendments also seek to include motor vehicle dealers and Kruger rand dealers in Schedule 1 to the FIC Act as a new category of accountable institution, or high-value goods dealers.
This will introduce a requirement for these businesses to identify and verify clients, retain client and transactional records and to perform other customer due diligence requirements.
The FIC Act places certain obligations on categories of businesses that are at risk of being exploited by criminals to launder criminal proceeds or finance terrorist activities.
The Treasury and the FIC believe the inclusion of the proposed new categories of business as accountable institutions within the framework against money laundering and terrorist financing will add significant value to the work of the FIC and strengthen its ability to support investigating and prosecuting authorities with quality financial intelligence information.