The FSCA and the South African Reserve Bank (Sarb) say they will strengthen their supervision of financial institutions to combat money laundering and terrorism financing, to address the deficiencies identified by the Financial Action Task Force (FATF).
Both regulators issued statements on Friday following the FATF’s decision to place South Africa on its grey list.
The FSCA is responsible for the supervision of FSPs, asset managers and collective investment schemes with regard to anti-money laundering and counter-the-financing-of-terrorism (AML/CFT) legislation.
The Prudential Authority (PA), as well as the Financial Surveillance and the National Payment System departments of the Sarb, is responsible for AML/CFT supervision of banks, life insurers, mutual banks, co-operative banks, authorised dealers with limited authority, and clearing system participants.
FSCA Commissioner Unathi Kamlana said: “We remain more committed than ever in our supervisory efforts to combat money laundering and terrorist financing and to dissuade criminals who aim to misuse South Africa’s financial system for nefarious purposes. We will continue to work closely with the Interdepartmental Committee on AML/CFT led by National Treasury to strengthen South Africa’s fight against financial crime.”
The Authority said all accountable institutions falling within its supervisory mandate will be expected regularly to review their risk management and compliance programmes, enhance their understanding of AML/CFT risks, and implement effective controls to mitigate such risks.
It also expects accountable institutions to increase their reporting of suspicious and/or unusual transactions to the Financial Intelligence Centre and to comply fully with all other obligations in terms of the Financial Intelligence Centre Act.
The FSCA and the Sarb drew attention to the FATF’s position that it does not call for the application of enhanced due diligence measures on grey-listed jurisdictions.
“The FATF standards do not envisage de-risking or cutting off entire classes of customers but call for the application of a risk-based approach,” the Sarb said.
The Sarb said it expects banks and other financial institutions within its purview to comply fully with all their obligations and apply a high standard of supervision to safeguard and protect the integrity of the financial system.
“The FATF has acknowledged that the PA has made the most progress in terms of the application of a risk-based approach to supervision. Some of the work undertaken included the issuance of sector-specific guidance, conducting a second round of sectoral risk assessments, instituting a new risk rating tool, enhancing the frequency of inspections, holding regular outreach and awareness sessions with banks and life insurers, as well as seeking to engage foreign supervisors in host jurisdictions concerning cross-border subsidiaries and their respective money laundering and terrorist financing risk,” the Sarb said.
