The Financial Intelligence Centre Act (FICA) South Africa

What is the Financial Intelligence Centre Act (FICA) South Africa?

The Financial Intelligence Centre Act is South Africa’s primary anti-money laundering and counter-terrorism financing legislation. South Africa’s Financial Intelligence Centre Act (FICA) was introduced in 2001, establishing the country’s Financial Intelligence Centre (FIC) and introducing a basic framework to bring the country’s CFT / AML regulations into alignment with those of the wider international community. The Financial Intelligence Centre itself was established in 2003 (two years after FICA’s introduction): It is headquartered in Centurion in Gauteng Province, and the center is led by director Xolisile Khanyile, who has held the position since 2017.

Under FICA, the FIC works to maintain South Africa’s financial system, and promote economic growth and social development. The FIC also has the mandate to supervise financial institutions, promote compliance with the law, identify proceeds of crime, and combat money laundering and terrorism financing.

What does FICA South Africa do?

FICA sets out a regulatory framework for South Africa’s anti-money laundering and counter-financing of terrorism programs and positions the FIC as the supervisory body responsible for overseeing compliance with that framework. The legislative scope of FICA focuses on AML/CFT and its core is built around delivering domestic compliance with the FATF’s 40 Recommendations – considered the global standard for CFT and AML regulations. South Africa is a member of the FATF, and so must implement the policies and procedures set out by the organization’s recommendations via its domestic legislative system.

FICA complements the Prevention of Organized Crime Act (POCA), the Protection of Constitutional Democracy Against Terrorism-Related Activities Act (POCDATARA), and the Prevention and Combating of Corrupt Activities Act (PRECCA). It gives the FIC authority over banks, financial institutions, estate agents, brokers, and other intermediaries in the financial system operating in South Africa.

Under that authority, the FIC monitors South Africa’s financial markets and institutions, issuing registrations for industry participants and conducting periodic audits to ensure ongoing compliance with FICA.

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The Financial Intelligence Centre Act AML requirements

In 2017, the South African government passed the Financial Intelligence Centre Amendment Act which strengthened the capabilities of the FIC. Amongst their wider legal obligations to protect against financial crime, in order to comply with the Financial Intelligence Centre Act requirements, banks and financial institutions must develop and implement an internal AML/CFT program which:

• Adopts a risk-based AML/CFT strategy, tailored to the unique risk profile of each client
• Incorporates appropriate customer due diligence processes to verify their clients’ identities or establish beneficial ownership.
• Screens against a variety of risk factors to identify emergent and ongoing threats. In particular, programs must screen for sanctions, adverse media, and politically exposed persons.
• Satisfies record-keeping and reporting obligations to the FIC.
• Appoints a compliance officer responsible for overseeing the implementation of the program and conducting internal audits.

Institutions that fail to comply with the Financial Intelligence Centre Act obligations may be subject to penalties, including administrative sanctions, fines of up to R100 million, and even prison sentences. Institutions may also be required to implement remedial actions to resolve their compliance failures. The FIC may coordinate with other South African authorities to investigate incidents of non-compliance and enforce the law.

Beyond FICA South Africa

As part of the FATF, FICA gives the FIC a role in the international fight against money laundering. The FIC works with a global network of authorities and partners, sharing intelligence and helping to develop new AML/CFT strategies. The FIC takes a leadership role amongst other African financial intelligence units and has memorandums of understanding with countries all over the world.