FIC reporting: SA businesses are the shield against financial crime

SA businesses have a role to play in combating money laundering and terrorist and proliferation financing by ensuring their services are not knowingly or unwittingly exploited by criminals.

The Financial Intelligence Centre (FIC) Act requires that all accountable institutions listed in schedule 1 file certain regulatory reports with the FIC. These include reports on suspicious and unusual transactions, cash transactions above the prescribed threshold and terrorist property reports (TPRs). 

To identify reportable transactions or behaviour, institutions must perform transaction monitoring, which is an essential element of SA’s regime on anti-money laundering (AML), counter-terrorism financing (CTF) and counter-proliferation financing (CPF).

The FIC has issued Directive 5, which sets out requirements with which institutions must comply when using automated transaction monitoring systems. Public Compliance Communication No. 45, also issued by the FIC, provides guidance on Directive Five.

The information contained in the regulatory reports filed by institutions is central to the FIC’s development of financial intelligence, which law enforcement, prosecutorial authorities and other authorities can use for their investigations, prosecutions and applications for asset forfeiture.

Register before reporting

The first step accountable institutions must take before they can file a regulatory report is to register with the FIC. Registration is free and must be done via the FIC’s online registration and reporting system, goAML. 

Recent amendments have been made to the FIC Act to include sectors in schedule 1. These newly classified institutions include designated non-financial businesses and professions (DNFBPs) such as trust and company service providers; credit providers; legal practitioners practising for their own account as contemplated in section 34(5)(a) of the Legal Practice Act, or an advocate contemplated in section 34(2)(a) (ii) of the Legal Practice Act; high-value goods dealers; money and value transfer service providers; and crypto asset service providers.

These and other accountable institutions listed in schedule 1 of the FIC Act are all required to register with the FIC. The FIC’s goAML registration guide and tutorials have more information in this regard.

Reporting to the FIC

Once registered with the FIC, institutions can discharge their FIC Act reporting obligations. The three main regulatory reporting streams for DNFBP institutions are cash threshold reports (CTRs), suspicious and unusual transaction reports (STRs) and terrorist property reports (TPRs).

Cash threshold report

An institution must file a report when a cash transaction is concluded with a client above the prescribed threshold of R49,999.99. A CTR must be submitted to the FIC as soon as possible, but no later than three days after the institution has becoming aware that a cash transaction has exceeded the prescribed threshold. FIC Guidance Note 5C provides guidance on CTRs. Cash refers to paper money, coins and travellers’ cheques.

Suspicious and unusual transaction report 

Where an institution suspects a transaction or an activity involves money laundering, terrorist financing or a contravention of financial sanctions, they must report this suspicion to the FIC as an STR. 

A suspicion may involve several factors that could seem insignificant, but taken together may arouse suspicion concerning that situation. A reporter should evaluate the transactions and the client’s financial history, background and behaviour when determining whether a transaction or activity is suspicious or unusual. 

An STR must be reported as soon as possible without delay, and no later than 15 days of the institution becoming aware of the suspicion. An accountable institution can continue with the transaction when an STR has been submitted to the FIC, however they may not disclose that a report was submitted, nor the content of the report. Doing so would amount to ‘tipping off’.

Refer to Guidance Note 4B for further information on STRs.

Terrorist property report 

An accountable institution must submit a TPR when they possess property or are in control of property of a person or entity that is designated on a UN Security Council (UNSC) Targeted Financial Sanctions (TFS) list. TPRs must be filed within five days of the institution becoming aware of this. The consolidated targeted financial sanctions list is accessible for free on the FIC website. FIC Guidance Note 6A provides guidance on TPRs. 

Not only is there a reporting duty where a person is a designated person, there is also an obligation to freeze all assets. When filing a TPR, it is an offence to continue with the transaction or deal with the property in question. 

International funds transfer report 

Another reporting obligation that stems from the FIC Act is international funds transfers reports (IFTRs). Only certain accountable institutions have the obligation to file IFTRs with the FIC.

These institutions include authorised dealers with limited authority; a category of financial services providers that have a direct reporting dispensation under the Exchange Control Regulations; and Postbank. Other accountable institutions besides those listed here are not required to submit IFTRs. See FIC draft Guidance Note 104A, which provides additional guidance on IFTRs. 

For more information, visit the FIC website. Alternatively, contact the FIC’s compliance contact centre on +27 12-641-6000 or log an online compliance query on the FIC website.

This article was sponsored by the Financial Intelligence Centre.