If there was ever any doubt about just how serious the world is about money laundering and related crimes, this was dispelled by the recent example of Australia’s Commonwealth Bank agreeing to a US$530 million fine over money-laundering breaches.
“While not deliberate, we fully appreciate the seriousness of the mistakes we made,” said CBA chief executive Matt Comyn in a statement. “Our agreement today is a clear acknowledgement of our failures and is an important step towards moving the bank forward.”
Closer to home we reported in April last year about a prominent motor dealership who mistakenly neglected to report on certain transactions and was fined R368 000.
Motor dealers, as reporting institutions, adopted procedures in terms of which the dealership itself did not accept any cash from any client or potential client but, instead, instructed the client to pay the amount directly into the dealerships bank account. It was then assumed that, because the money was not physically received by the dealership, there was no need to report this.
The latest FSCA newsletter contains important news about FICA which applies to all FSPs who are obliged to register as Accountable Institutions (AIs). We covered this extensively in an article published on 18 April 2018 titled Regulatory Focus on FICA.
The Authority is to be commended for the way in which it approaches this matter. Rather than wielding the big stick, it encourages gradual implementation, and provides guidance and assistance in the process, with a very reasonable period before it will start taking action.
Below is an extract from the May 2018 FAIS Newsletter.
The FAIS Newsletter published on 04 December 2017 indicated that enforcing compliance with the new provisions of the FIC Amendment Act will be delayed to 01 December 2018. This date was determined based on the few responses received in reply to the FIC’s state of readiness survey. Having taken into consideration concerns raised over challenges experienced in implementing the new requirements, a decision was taken to set a single date for all institutions regulated by the Financial Sector Conduct Authority (FSCA) and align it with the date set by the Prudential Authority.
Therefore, the cut-off date for enforcing compliance has been changed to 02 April 2019. The alignment was deemed necessary in order to achieve effective supervision, promote coordination of supervisory activities and ensure that the two agencies work in similar ways.
NB The bulk of the FICA legislation became effective on 2 October 2017. The above date only applies in respect of the FSCA enforcing compliance with the requirements. It is therefore vitally important to implement whatever steps are necessary to comply with the FICA legislation.
During the period leading up to this date, institutions are expected to demonstrate full compliance. Institutions are encouraged to implement the new requirements as early as possible. The respective supervision departments within the FSCA will engage with regulated institutions to establish progress towards implementation of the new requirements.
The FAIS Supervision department will conduct surveys on a quarterly basis from end of June to obtain feedback on implementation levels and indication of timelines to address the outstanding requirements. The surveys will focus on different types and/or categories of FSPs each quarter.
The first survey, focused on sole proprietors, was sent out last week.
The FAIS supervision department is committed to providing support and guidance to supervised entities regarding the FICA provisions. In this regard the FAIS supervision department will continue to conduct workshops for category I FSPs. The purpose of the workshops is to assist this category of FSPs to better understand their obligations in respect of the new provisions of the FIC Amendment Act.
A series of workshops will be held at the FSCA’s offices in a continued effort of creating awareness and education and promoting implementation of the FIC Amendment Act. Small FSPs without compliance officers are encouraged to attend these workshops. In addition to this, the FAIS supervision division will continue to conduct onsite inspections to assess the level of compliance with the FIC Act and in preparation for the Financial Action Task Force evaluation in 2019.
Please note that Moonstone also offers a FICA Awareness Online Workshop which can earn learners 4.5 CPD hours. This training is available at no cost to Moonstone Compliance clients.Non-clients only pay R500 per learner.
FICA Compliance Reports
The 2018 Compliance Reports will be published in June 2018 and will exclude a section on FICA compliance. The FAIS Supervision department is developing a new Anti-Money Laundering & Counter-Terrorist Financing annual compliance report which will be designed to ensure that we ask the right questions to maximise the report’s value. The FICA compliance report will be published in due course for consultation.
Click here to download the May 2018 FSCA FAIS Newsletter. It also reports extensively on the Regulatory Exams.