FICA and AML Updates for 2023

2023 was a year of significant change within South Africa’s Anti-Money Laundering, Combating the Financing of Terrorism and Counter Proliferation Financing environment. From Cash Threshold increases for reporting, Schedule 1 Accountable Institution additions, to considerable amendments to FICA in the form of the General Laws Amendment Act and new Directives 6, 7 and 8 among others. 

Cash Threshold Amendments

The first considerable change took place on 14 November 2022 regarding amendments to Cash Threshold Reporting. The monetary threshold was increased for cash reporting from deposits or transfers of R24 999 and above to R49 999 and above as a single transaction only. Read more here.

Schedule 1 Amendments

Towards the end of 2022 the Government Gazette published changes to Schedules 1,2 and 3 of FICA. The amendments aimed to close gaps in anti-money laundering (AML) and counter financing of terrorist (CFT) coverage in South Africa by expanding the reach of the FIC Act. Whilst it significantly increased the number of people and firms identified as Accountable Institutions who are now subject to its full requirements, it does provide the Financial Intelligence Centre with additional valuable intelligence across a broader range of financial and non-financial industries at risk of being leveraged by those with criminal intent.

Read more about the New Accountable Institutions here.

General Laws Amendment Act

The General Laws (Anti-Money Laundering and Combating Terrorism Financing Amendment Act) was gazetted on 31 December 2022. The Act is a key legal mechanism aimed at addressing the deficiencies identified by the FATF in its Mutual Evaluation Report and observation period of South Africa’s AML/CFT landscape and was effectively South Africa’s last legislative hope in attempting to avoid greylisting at the time.

The Act amended 5 pieces of legislation, being incorporated into one holistic, omnibus Act. Read more about the FICA Amendments here. 

New Directives: Directives 6, 7 and 8 

The FIC issued new directives (6,7 & 8) which were gazetted on Sunday 2 April 2023 and backdated to 31 March 2023, when they came into force.

Directive 6 & 7: Serve to inform certain Accountable Institutions that they must submit information regarding their understanding of money laundering, terrorist financing and proliferation financing risks and their assessment of compliance with obligations in terms of the FIC Act to the FIC through a risk and compliance return. 

Directive 8: Requires Accountable Institutions to screen prospective employees and current employees for competence and integrity, as well as to scrutinise employee information against the Targeted Financial Sanctions lists, in order to identify, assess, monitor, mitigate and manage the risk of money laundering, terrorist financing and proliferation financing. Here is a summary of what is required for this directive.

Many of these changes were proactively taken, aimed at preventing a greylisting designation but also as reactive responses based on the FATF’s recommendations after South Africa was greylisted in February 2023.

For South Africa to be removed from the greylist in quick succession like Mauritius did in just two years, a collaborative and determined effort from multiple stakeholders are essential. In addition to government, law enforcement agencies and the FIC themselves, Accountable Institutions can play a supporting role in actively complying with the mandates of FICA and significantly contributing to remedying the recommendations set out by the FATF.

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