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FSP FICA Obligations

There appears to be a fair amount of uncertainty about what exactly a financial adviser’s obligations under the Financial Intelligence Centre Act are. I suspect that, in many instances, many would rather NOT know but, unfortunately, this not an option.

Below are some of the most important considerations you should be aware of, apart from, of course, the obligation to register.

Accountable Institutions

If your FSP is authorised to render financial services in respect of any financial product other than short-term products and/or health benefits, it is classified as an Accountable Institution.

Juristic representatives of FSPs are also obliged to register in their own capacity if their products require them to do so.

Motor dealers are regarded as Reporting Institutions, and are subject to other requirements. Please read our article titled FIC and Motor Vehicle Dealers for more detail.

Internal Rules

Under section 42, an Accountable Institution must formulate and implement internal rules to document procedures for:

  • The establishment and verification of client identities
  • Record keeping
  • Reporting of suspicious and unusual transaction transactions and
  • The appointment of a FIC compliance officer

The board of directors and senior management of an Accountable Institution are responsible for FIC compliance.

Internal rules should be approved by the Board and senior management and be made available to the FIC and FSB on request.

FIC Compliance Officer

Section 43 determines that an Accountable Institution has a duty to formally appoint a FIC CO. Such a person is required to have general knowledge of the overall operations of the institution. The CO should interact with all departments and branches to keep abreast of changes that may require action to manage any perceived risk and to ensure corrective action where required.

Training and Monitoring

Section 43 also stipulates that:

  • An Accountable Institution must provide training to its employees on FICA and its own internal rules
  • The CO is responsible for ensuring that training takes place
  • The training manual must be updated regularly
  • Training should be ongoing, with regular refresher courses
  • Employees may need to be assessed to evaluate level of knowledge and understanding
  • Employees should not deal with clients before being trained on FICA and the Accountable Institution’s internal rules.

A training program should educate employees of the Accountable Institution on the following compliance obligations and the internal procedures dealing with:

  • The duty to identify clients in terms of section 21 of the FIC Act and Regulations 3 to 19 to the FIC Act. A training programme should enable employees to correctly identify different types of clients in accordance with the FIC Act and the Regulations.
  • The duty to keep records in terms of section 22 to 26 of the FIC Act and Regulation 20 of the Regulations. Employees should understand the duty to keep records correctly as per the Accountable Institution’s internal procedures.
  • The reporting duties and access to information in terms of section 27 to 41 of the FIC Act and Regulations 22 to 24 of the Regulations. Employees should be able to correctly identify and report different reportable transactions in accordance with the FIC Act and the Regulations.
  • The measures to promote compliance by the Accountable Institution in terms of section 42 to 43 of the FIC Act and Regulations 25 to 27 of the Regulations.

On-line Fica awareness training is available from Moonstone Business School  of excellence:

  • Moonstone Compliance clients – no cost
  • Non-clients – R500 per learner.

To register, simply click on this link, then on the applicable FICA Awareness Workshop (Moonstone or non-Moonstone) and follow the instructions.

http://learn.mbse.ac.za/mbse_application/index.php

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