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FIC guidance on risks related to geographical areas

The Financial Intelligence Centre (FIC) has issued Public Compliance Communication 49 (PCC 49) that provides guidance on certain money laundering (ML), terrorist financing (TF) and proliferation financing (PF) risk considerations and provides suggested resources that may be consulted in determining the ML/TF/PF risk related to geographic areas.

Last year, Draft PCC 110 was made available for consultation to accountable institutions, supervisory bodies and all other persons. According to the FIC, all comments received have been considered and incorporated into PCC 49 where appropriate.

“An accountable institution relies on different money laundering, terrorist financing and proliferation financing indicators to determine the risk that a business relationship and/or single transaction may pose to the accountable institution. One of these indicators relates to geographic areas. It is not the geographic area in and of itself that could pose a ML/TF/PF risk, but the features and activities associated with such a geographic area,” according to the PCC.

The communication further clarifies that there is no single list that accountable institutions can rely on to determine the ML/TF/PF risk posed by a particular geographic area. Rather, this determination is made by the accountable institutions taking into consideration applicable criteria.

There are several open-source resources that accountable institutions may consider when determining the ML/TF/PF risks associated with geographic areas.

At a minimum, the FIC considers the listings as issued by the Financial Action Task Force (FATF) regarding ML/TF/PF risk per geographical area as a core data source that has certain implications for South Africa for non-consideration of these risks.

Click here to download PCC 49 that highlights a certain set of features and/or activities that accountable institution would need to review the geographic area against, as well as lists several international associations’ publications that accountable institutions may consider as source information to assist in their determination of ML/TF/PF risk in relation to geographic areas.

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