“I’m responsible for FICA at my accounting firm. With the possibility of certain of the exemptions issued in terms of the Financial Intelligence Centre Act, being withdrawn by the new amendment act, I’m worried that our firm will now have to comply with all areas of FICA. Will this be the position?”
You are correct in that it appears that changes brought about by the Financial Intelligence Centre Amendment Act 1 of 2017 (“Amendment Act”), have lead to the withdrawal of many of the exemptions previously approved under the Financial Intelligence Centre Act 38 of 2001 (“FICA”).
The Amendment Act introduces a risk-based approach as an integral element to complying with FICA. This approach makes these exemptions redundant as these exemptions are now implicitly included in the provisions of the Amendment Act and will need to be addressed in an accountable institution’s Risk Management and Compliance Programme (“RMCP”).
While the Amendment Act requires accountable institutions to obtain more information from clients than before, it at the same time allows accountable institutions greater flexibility to themselves to determine the extent of customer due diligence to be conducted based on the risk relating to a specific client. This assessment should be carried out by taking into account the money laundering and terrorist financing risks posed in relation to the client, the products and services rendered to the client as well as other relevant factors.
The content of the exemptions may therefore still act as a guide to accountable institutions in order to determine the suitable verification measures to be taken in accordance with its RMCP. This basically means that, the higher the risk, the more questions will need to be asked and the more documents should be collected by the accountable institution in order to ensure that the client’s information is correct. In cases of lower risk clients, simplified measures may be applied.
Although many of the exemptions have been withdrawn, it is clear that they remain relevant and that it is important for accountable institutions to obtain professional advice to ensure compliance with the Amendment Act. Our advice is to contact an attorney to assist you with your RMCP and to ensure that such is in line with the new legal framework established by the Amendment Act.