The Financial Intelligence Centre (FIC) says compliance inspections have exposed a “widespread failure” by businesses to develop or implement proper risk management and compliance programmes (RMCPs).
The centre monitors financial transactions for money-laundering or terrorism financing.
“The significance of having a robust RMCP for combating money laundering, terrorist financing and proliferation financing cannot be taken lightly,” the FIC said in a strongly worded statement on Wednesday.
Every type of financial and nonfinancial accountable institution identified in the Financial Intelligence Centre Act (Fica) must establish, record, maintain and apply a RMCP. These institutions are obliged to furnish their RMCPs on request.
“An adequate RMCP may safeguard accountable institutions from legal entities and natural persons seeking to criminally abuse the accountable institution,” said Christopher Malan, executive manager for compliance and prevention at the FIC.
“RMCPs are fundamental to protecting accountable institutions and, ultimately, the integrity of our financial system.”
In the 2023/24 financial year, the FIC received 414,984 “suspicious and unusual transaction reports”. A total of R295.8m of suspected criminal proceeds were frozen, and more than R98.5m worth of proceeds of crime were recovered, with the help of the FIC’s financial intelligence.
The FIC issued a general request in March to sectors under its purview to submit their RMCPs electronically by March 12. Despite the deadline having passed, the obligation remained binding, the FIC said on Wednesday.
The requirement applies to all entities listed in schedule 1 of the FIC Act, spanning financial and nonfinancial institutions.
One of the key findings of the Financial Action Task Force (FATF), the Paris-based global organisation that sets standards for regimes to combat money-laundering and terrorism financing, was that SA’s nonfinancial businesses and professions lack understanding of their exposure to these risks.
Nonfinancial sectors — such as real estate, legal services and casinos — are especially vulnerable due to the large sums of money they handle.
The FATF greylisted SA in February 2023 for failing to meet its compliance standards, damaging investor confidence and complicating financial transactions and correspondent banking.
On Wednesday, the FIC said its critical businesses tailored their RMCPs to reflect the risks associated with their specific client types and services.
For instance, estate agents must consider scenarios where clients pay cash for rentals and then request refunds under questionable circumstances. Such cases must be anticipated and addressed within internal policies.
“Accountable institutions are reminded that non-submission of the RMCP constitutes noncompliance with the FIC Act,” the FIC said in its statement.
But submission alone is not enough. Malan warned that submitting an RMCP did not mean it met all compliance requirements. Inspections and monitoring would assess it against legal standards.
The warning issued by the FIC should be taken very seriously, cross-border payments provider Verto SA said in a statement.
“There are enormous economic opportunities that wait for us right here on our doorstep in Africa,” Verto country director Cornelius Coetzee said.
“In order to fully tap into these, we have to show the world that our financial system is safe and we have to get off the greylist. This is why everyone should heed today’s FIC warning.”
Business Day reported that in mid-December, the Treasury proposed a raft of amendments in a draft General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill to address legal loopholes of concern to FATF.
SA’s regulatory authorities have also been working around the clock to provide the FATF with reports on the progress in SA’s bid to exit the greylist.
Update: May 7 2025
This story has been updated with comments by Verto SA.
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