The Financial Intelligence Centre (FIC) has urged businesses and professionals handling large amounts of money to increase their rate of submission of risk and compliance forms under its increased scope of regulation, if South Africa hopes to be removed from the Financial Action Task Force’s (FATF’s) greylist by December.
Christopher Malan, executive manager for compliance and prevention at the financial watchdog, said while designated non-financial businesses and professions have increased their efforts to help the country exit the greylist, these entities need to improve their knowledge of their levels of internal risk.
“Areas of concern remain [their] level of understanding of their own risk and compliance situation, and their reporting to the FIC as their sole supervisory body for anti-money laundering, combating terrorist financing, and countering the financing of proliferation of weapons of mass destruction,” he said.
Designated non-financial businesses and professions are companies, businesses and professionals that do not fall within the finance sector but are at risk of money laundering and terror financing due to the large amounts of money they handle. These include real estate agents, law firms and casinos, which must now file risk and compliance returns to the FIC.
The FIC gained jurisdiction over these sectors in 2023 after South Africa was greylisted by the Financial Action Task Force (FATF). During a plenary in February, the task force upgraded four of South Africa’s six outstanding action items, raising hopes the country could exit the greylist by October.
Malan said on average, the risk and compliance returns submission rate by legal practitioners and estate agent businesses was about 70%, with legal practitioners and estate agents submitting 11,351 and 6,506 returns respectively.
“While the priority risk-based focus is on estate agents and legal practitioners, the other sectors, such as high value goods dealers, including dealers in precious stones, dealers in precious metals, and trust service providers, must also substantially and urgently file their outstanding [returns] with the FIC.”
He warned that with little to no information on the risks these sectors face, the watchdog body can only assume that those who are non-compliant are at high risk of money laundering and terrorist financing abuse.
Finance minister Enoch Godongwana’s 2025 budget review said the government was continuing to address the 22 action items in the action plan agreed with the FATF, and once all of them were implemented, the FATF will reconsider the country’s greylisting
Werksmans associate in banking and finance Sandiso Dhlomo said the FIC published a draft directive and draft public compliance communication in March, in terms of the Financial Intelligence Centre Act (Fica), for consultation and public comment. “[These set] out the procedure to be followed by all accountable institutions and any other person obligated to report to the FIC [as] reporting institutions should a reporting failure occur, or a defective report be submitted.”
He said the directive prescribes measures for reporting institutions to mitigate the loss of intelligence data by the FIC due to reporting failures by an institution, including defective reports.
“It is expected that the final publications will be published in the not-too-distant future. Both publications are a welcome update as they address a major lacuna in the Fica regulations, aid the FIC in fulfilling its obligations, and fortify anti‑money laundering, terror financing and proliferation laws of South Africa.”
Dhlomo advised reporting institutions to remain current with their reporting obligations to fulfil their responsibilities and avoid any enforcement action by supervisory bodies, such as administrative fines or undesirable reputational damage.
Finance minister Enoch Godongwana’s 2025 budget review said the government was continuing to address the 22 action items in the action plan agreed with the FATF, and once all of them were implemented, the FATF will reconsider the country’s greylisting.
He said the remaining action items related to increasing investigations and prosecutions of complex money laundering and terror financing. South Africa is working to address both outstanding action items by June to exit greylisting by October, he said.
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