The Financial Intelligence Centre (FIC) is adopting a hard line with estate agents and legal practitioners who fail to provide requested information about their businesses.
FIC acting director Pieter Smit said during a panel discussion on greylisting at an industry conference of the Financial Sector Conduct Authority that the response by the two sectors — regarded as high risk in terms of money-laundering — to requests for information had been weak.
The information is critical if SA is to be removed from the greylist imposed by the Financial Action Task Force, the body that sets global standards for the combating of money-laundering and terrorism financing. The greylisting resulted in enhanced due diligence, a higher cost of business and delayed transactions for financial institutions.
Smit said the FIC had developed a robust risk assessment tool to supervise each sector, but this was useful only if it was fed data from business, which was a challenge with regard to legal practitioners and estate agents who were not used to complying with regulatory pressure.
“We have started imposing administrative sanctions, but we have also taken the view that if you are aware of your obligations and you choose not to comply we are going to assume that you are high risk — otherwise why wouldn’t you want to tell us about your business? This is the message we are starting to spread in our discussions with financial institutions which bank these institutions. Hopefully this will improve behaviour.”
Being designated high risk would result in heightened supervision. Smit said that noncompliance in one business could be passed on to another with which it transacted.
In February, FIC executive manager for compliance Chris Malan highlighted the lack of co-operation by legal practitioners and estate agencies, and said the next stage would be to impose a sanction of R50,000 on each head office and branch that had not complied.
In February, Institute of Estate Agents of SA chair Ivan Neethling reported on the experience of an estate agent, who found FIC risk and compliance workshops “confusing”, and said it was difficult to grasp what was required by the questionnaire.
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