The Financial Intelligence Centre (FIC) has issued a Guidance Note to help accountable institutions meet their international funds transfer reporting obligations in terms of the Financial Intelligence Centre Act (FICA) and the Money Laundering and Terrorist Financing Control Regulations.
Guidance Note 9, which was published on 17 November, explains the reporting timelines, how reports must be sent to the FIC, what information must be included in the reports, and how to use the electronic reporting system.
The final Guidance Note 9 replaces draft Guidance Note 104A and draft Guidance Note 104.
Section 31 of FICA obliges certain accountable institutions to report international funds transfer transactions above a prescribed threshold to the FIC in the prescribed form. Such a report is referred to as an international funds transfer report (IFTR).
The section 31 obligation applies only to certain categories of accountable institutions that are authorised to conduct the business of cross-border electronic funds transfers). These are institutions that are authorised in terms of the regulations under the Currency and Exchanges Act to conduct transactions under these regulations. Accountable institutions with this authorisation are:
- authorised dealers;
- authorised dealers with limited authority;
- a category of financial service providers that have a direct reporting dispensation under the Exchange Control Regulations; and
- the South African Postbank.
When does the reporting obligation arise?
The prescribed threshold to trigger an IFTR is an amount above R19 999.99. This means that all electronic cross-border transactions – the sending of funds out of South Africa and/or the receiving of funds from outside of South Africa – on behalf or on the instruction of another person from a value of R20 000 and above must be reported to the FIC.
When determining whether a transaction exceeds the threshold, reference must be made to the actual value that crosses the border excluding any transaction fees. For example, Mr X instructs his bank to send R19 800 via EFT to his friend in the United States. The transaction fee is R300, so Mr X pays his bank R20 100. The bank will not have a reporting obligation because only the transaction value of R19 800 is considered.
Aggregation does not apply when determining the threshold amount. This means the threshold applies to every cross-border transaction.
Examples of reportable and non-reportable transactions
Cross-border EFT transactions that are reportable as an IFTR include:
- Remittances and payments through which funds are sent and/or payments are made to persons located outside of South Africa.
- Remittances and payments through which persons in South Africa receive funds from persons located outside of South Africa.
- Incoming credit and debit card transactions where the transaction is linked to an account held in South Africa.
- Outgoing credit and debit card transactions where the transaction is linked to an account held outside of South Africa.
- Funds paid into, and refunded from, electronic wallets and cash passports intended for international spend.
Examples of transactions that are not reportable as IFTR include:
- A cash withdrawal or deposit abroad – that is, a debit or credit card deposit or withdrawal by client. But a cash threshold report (CTR) must be filed if the cash withdrawal or deposit abroad exceeds the cash threshold amount.
- Transactions relating to interbank transactions between banks – for example, settlement of account debits and credits between banks. It is the responsibility of the bank to determine which transactions meet the definition of an interbank transaction and which do not. It is the understanding of the Centre that if the transaction does not relate to the bank’s money, this would not be considered an interbank transaction.
What is the deadline for submitting an IFTR?
An IFTR must be submitted to the FIC as soon as possible, but not later than three days (excluding Saturdays, Sundays, and public holidays) after the accountable institution has become aware of the fact that the transaction has occurred.
An accountable institution may become aware that a transaction has occurred and has become reportable on the date that the value of funds is given to the beneficiary (receiver), where the beneficiary can take unfettered receipt of such funds. An IFTR must be done as soon as possible, but no later than three business days from the date that value is given.
Each IFTR transaction must be reported separately. Multiple transactions may not be reported as one summarised transaction.
Multiple reports for the same transaction
The Guidance Note highlights that a transaction may give rise to the submission of multiple reports to the FIC – for example, a CTR, an IFTR, and possibly a suspicious and unusual transaction report (STR), a suspicious activity report, a terrorist financing activity report, or a terrorist financing transaction report.
For example, Mr X deposits R500 000 in cash at Bank A and requests that these funds be remitted to Mr B in Namibia. The deposit does not meet the client profile, and Bank A notes this as a suspicious transaction. In this case, Bank A will submit three reports: An IFTR for the remittance of funds outside of the Republic, a STR for the suspicious transaction noted, and a CTR for the cash deposited that exceeds the cash threshold.
We can help
Moonstone Compliance offers compliance, consulting, and training options for accountable institutions of all types and sizes to help them implement anti-money laundering procedures and meet the requirements of FICA.
Moonstone Compliance will explain the complex regulations and offer practical recommendations tailored to your business.
We provide a wide range of services, from providing documentation to implementing a full compliance framework. You can select a combination of services and have them customised to suit your needs.