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How does the FIC Amendment Act affect your business?

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HGG Financial Group brings you up to speed on this important piece of recent legislation and what it means for you as a business owner.

Why do we have an FIC Amendment Act?

South Africa is a member of the Financial Action Task Force (FATF), an international organisation that aims to prevent financial crime. Previously, South African financial institutions were regulated by the Financial Intelligence Centre Act (FIC Act) of 2001. But the FIC Act didn't meet the FATF's standards, so it was recently replaced by the FIC Amendment Act (signed into law by President Zuma in April 2017), which takes a stronger stance against money laundering, illegal financial transactions across borders and the financing of terrorism.

Who does it apply to?

The FIC Amendment Act affects accountable institutions, such as estate agents, banks, foreign exchange service providers, trusts, attorneys and others.

What has changed right now?

On 13 June this year Finance Minister Malusi Gigaba signed certain parts of the new Act into operation. Fortunately, these sections do not require institutions to make changes to existing regulations, exemptions or internal systems to enable compliance with the Act.

The first set of provisions deal mainly with the new powers (or capabilities) of the Financial Intelligence Centre, especially relating to information sharing, consultation arrangements, inspection powers, and improved functioning of the FIC Act Appeal Board.

What will change in October?

The second set of provisions becomes effective on 2 October 2017 and has considerable implications for the accountable institutions mentioned above. Here are a few of the changes that institutions will have to comply with:

  • Business owners and those who control businesses (beneficial owners) must be identified to prevent the misuse of legal entities to commit crimes such as tax evasion (no anonymity or shell companies are permitted).
  • The customer due diligence process must be improved to ensure that business owners understand the potential risks (terror, money laundering and other) posed by their customers.
  • Business owners will be required to identify, assess and understand the money laundering and terror finance risks their business faces in terms of the products and services they offer their clients.
  • Staff members will have to be trained to comply with the FIC Amendment Act, as well as its risk management and compliance programme.

Is anything else likely to change?

The only provisions that have yet to be given an implementation date are those relating to sections 26A to 26C, which deal with the freezing of assets in terms of the UN Security Council Resolutions on targeted financial sanctions, and Schedule 3A dealing with the setting of a monetary value threshold for companies doing business with the State.

How do I make sure I'm compliant by October?

HGG Professional Accountants is here to help our clients. Contact us today and our capable team of directors will advise you on any changes you might be required to make in terms of the new FIC Amendment Act requirements. Feel free to e-mail Petro Hartman (Somerset West), Leras Uys (Paarl) or Gunter Droste (Durbanville). Alternatively, call us on (021) 851 2778.