The Financial Intelligence Centre (FIC) said it will resort to targeted inspections and sanctions on institutions that refuse to submit their risk and compliance return (RCR) questionnaire meant to assist companies in identifying the money-laundering and terrorist financing abuse risks they face.
Legal practitioners, estate agents and trust service providers, with the exception of casinos, top the list of sectors that have not fully complied with the FIC’s directives.
In a statement the FIC said the due date for the RCR submissions was the end of May 2023 but it was still struggling to get companies in these sectors to fully comply.
Christopher Malan, executive manager for compliance and prevention at the FIC, said the behaviour by companies in the identified sector was “wilfully” hurting SA’s efforts to get off the Financial Action Task Force (FATF) greylist.
The FATF put SA on its greylist in February 2023 after it found the country’s anti money laundering efforts fell short of global standards.
He said the FATF had said in June that it had made progress in understanding the risk of non-financial businesses and professions after the introduction of the RCR, but the watchdog expressed its concern about the low rates of RCR submission to the FIC by these entities.
“Institutions that have still not submitted their RCRs, are considered delinquent institutions and are automatically deemed to be at high risk of being used for money laundering and terrorist financing purposes. These institutions now face targeted inspections or targeted sanctions for their noncompliance,” Malan said.
“Over and above this, these businesses are dismantling and disrupting SA’s efforts to exit the greylist and improve the country’s standing in the world economy. Remaining on the greylist can impact the lives of ordinary citizens, let alone a broad range of business and the economic future of the country as a whole.”
Since being greylisted, government departments and agencies — including the police, the Hawks, the National Prosecuting Authority (NPA), Special Investigating Unit (SIU), State Security Agency (SSA), Reserve Bank, Financial Sector Conduct Authority (FSCA) and SA Revenue Service (Sars) — have been working to address deficiencies flagged by the FATF.
SA has until January 2025 to attend to all issues flagged by the FIC, including adopting legislation providing for the identification of the beneficial owners of companies and trusts.
The National Treasury in the Tax Administration Laws Amendment Bill tabled in parliament at the end of 2023 outlined plans to amend section 70 of the Tax Administration Act to include the Companies and Intellectual Property Commission (CIPC), the directorate for nonprofit organisations and the master of the high court as entities Sars can share confidential taxpayer information with as it seeks to unmask beneficial owners.
Malan said the FIC had already embarked on issuing notices of intention to sanction, aimed at remediation and payment of fines as admission of noncompliance.
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