EDITORIAL FICA implementing a Risk Management and Compliance Programme( RMCP), failing to scrutinise clients against the targeted financial sanctions( TFS) list, and sharing login credentials on the goAML system. This case marked the first appeal of its kind, in which the FIC’ s decision to enforce penalties was upheld by the Appeal Board.
The consequences of non-compliance
If anything, these sanctions showcase the consequences of noncompliance and indicate that the era of leniency is well and truly over. They also demonstrate SARB’ s commitment to upholding robust financial practices and preventing financial crime. FICA is not a suggestion – it’ s the law and the law is coming for those who fail to meet their obligations.
And let’ s not forget that the cost of non-compliance extends far beyond penalties. The impact of the reputational damage, operational disruption and potential loss in trust, that can negatively affect established business partnerships, can often be far worse than the financial implications. Even a small lapse in compliance can lead to devastating consequences. This puts additional pressure on all accountable institutions to prioritise compliance, especially given recent amendments, which have expanded the definition of what constitutes an‘ accountable institution’. The new definition now includes crypto-asset providers and high-value goods dealers, among others. These changes aim to close gaps in existing anti-money laundering( AML) and counter-terrorist financing( CFT) prevention measures and better align South Africa’ s regulations with international standards.
The importance of automation in compliance
If we want to be removed from the grey list next year, all accountable institutions must recognise their role in safeguarding South Africa’ s financial system. Compliance is not only a legal requirement; it is also a strategic asset in a business landscape where trust and transparency are becoming increasingly important. In addition, having the right compliance strategy and infrastructure in place future-proofs businesses
FICA compliance checklist
To ensure FICA compliance, institutions must adhere to the following requirements:
• Register with the Financial Intelligence Centre( FIC)
• Appoint an Anti-Money Laundering( AML) / Combating the Financing of Terrorism( CFT) Compliance Officer
• Develop a Risk Management and Compliance Programme( RMCP)
• Perform Customer Due Diligence( CDD)
• Submit reports to the FIC
• Keep records
• Provide ongoing training
• Screen for persons on sanction lists and Politically Exposed Persons( PEPs) lists
• Monitor transactions and customer behaviour
• Report suspicious activity
Beyond greylisting
These obligations have become even more critical, and there has been greater regulatory scrutiny, since South Africa was greylisted by the Financial Action Task Force( FATF) in February 2023. Being placed on the FAFT’ s grey list means that our country has various shortcomings when it comes to preventing money laundering, fraud, and terrorist financing. At the time, the FAFT provided a breakdown of where we were falling short and gave us a strict deadline to address these 22 strategic deficiencies. That deadline is looming.
At present, there are about six outstanding items on the list that must be remedied before February 2025. One of the outstanding action items, which should have already been completed, was delayed due to low compliance by companies and trusts, such as the financial services brands mentioned above. against evolving regulatory demands. Tools like VOCA, powered by SearchWorks, streamline compliance processes for accountable institutions.
A verification, onboarding, and compliance application, VOCA simplifies compliance by automating customer due diligence processes and ensuring adherence to FICA requirements. When compliance is automated, tasks such as ID verification and document validation happen automatically, in real-time, which streamlines the onboarding process and reduces the risk of oversight. Furthermore, applications like VOCA are designed to have a deep understanding of local regulations, including the latest amendments to FICA so that businesses don’ t have to stress about failing to update their compliance strategies. When compliance is automated, manual efforts are reduced, which means that businesses have more time to focus on your core business activities. ■
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