The existing FIC Act 38 of 2001 was amended due to the fact that South Africa is a member of the Financial Action Task Force (FATF), an international body that works with financial institutions to combat financial crime. However, the existing Act does not meet the standards of the FATF.

The Minister of Finance has signed and gazetted various provisions of the abovementioned Act to come into operation on 13 June 2017. The implementation of different provisions of the Act will be effective on different dates. The next date of implementation was 2 October 2017 and thereafter a date will be determined for the final implementation of the remaining provisions.

This amendment will not have a direct impact on everyday consumers, but will affect attorney firms, estate agencies, banks, trusts and all other accountable institutions directly. The term “accountable institution” is defined as a person or organisation referred to in Schedule 1 of the FIC Act that carries out business of any entity listed in the Act.

The provisions which came into effect on 13 June 2017 do not require changes to existing regulations, exemptions or internal systems of institutions to comply with the FIC Act.

The provisions which came into effect on 2 October 2017, however, introduces new terms and will require changes to existing regulations and exemptions under the existing FIC Act as well as staff training and major changes to systems by accountable institutions. These new terms are:

• Customer due diligence: Accountable institutions must assess whether domestic prominent influential persons and foreign prominent public officials present a higher risk to the institution. Transactions must also be monitored on an ongoing basis and not just once off.
• Risk management and compliance programmes: Accountable institutions must assess areas of their business that open up the risk of money laundering or financing terrorism. Steps must be taken to mitigate potential risk areas of a business.
• Beneficial ownership: Management will be held accountable for non-compliance with the Act.
• Freezing of assets: Properties and transactions can be frozen.

The aim of the Amendment Act is to be more stringent and to effectively attempt to extinguish money laundering, illegal financial transactions and the financing of terrorism.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.