Motor dealers are reminded that if they receive a cash payment from a customer of more than R24 999,99 – and here cash means coins, banknotes or travellers cheques – that this must be reported to the Financial Intelligence Centre on each occasion.
S 28(b) of the FIC Act, 2001 provides that a reporting institution must, within the prescribed period, report to the Centre the prescribed particulars concerning a transaction concluded with a client if in terms of the transaction an amount of cash in excess of the prescribed amount is received by the reporting institution from the client, or from a person acting on behalf of the client, or from a person on whose behalf the client is acting.
Many motor dealers, as reporting institutions, have adopted procedures in terms of which the dealership itself will not accept any cash from any client or potential client but, instead, instructs the client to pay the amount directly into the dealerships bank account. It is then assumed that, because the money was not physically received by the dealership, that there is no need to report this.
The FIC holds that this assumption is wrong – even such payments must be reported.
In several instances the procedure described above had been followed and the dealership was convinced that it had complied with all its obligations – particularly as the bank would report the cash threshold deposit anyway. The FIC held on-sight visits at various dealerships and, after disclosure of these procedures, imposed heavy sanctions on the dealerships on the basis that the dealership had neglected or failed to report cash receipts that exceed the threshold.
These sanctions take the form of fines ranging from R66 000 for 6 matters that were not reported to R 368 000 for 50 matters that were not reported.
If you have any uncertainty in this regard, please speak to your compliance officer.