News & Events
- August 23, 2023
South Africa’s Compliance Requirements on a Steep Rise
Penalties in South Africa for non-compliance are actively in effect and imposed under the Financial Intelligence Centre Act (FICA). Individuals and businesses must understand and comply with the latest laws applicable to their activities to avoid potential penalties and legal repercussions.
Current State of Play of Regulatory Compliance
In its efforts to align with other countries which follow the International Standard set by the Financial Action Task Force (FATF), South Africa enacted FICA in 2001 to address this issue. The introduction of FICA has drastically changed the mandatory requirements and failure to adhere to FICA regulations in South Africa can lead to significant penalties for both individuals and for companies:
Monetary Penalties:
Those breaching the FICA rules may face substantial fines. Natural persons could be fined up to ZAR 10 million (~ USD 535 K)*, while legal entities could be penalised with fines as high as ZAR 50 million (~ USD 2.7 M). The exact fine may vary depending on the severity of the violation.
Imprisonment:
In certain instances, individuals who violate the FICA regulations could be sentenced to imprisonment for a maximum period of 15 years OR may be liable to pay a fine of up to ZAR 100 million (~ USD 5.3 m).
License Revocation:
Financial institutions failing to comply with local Anti-Money Laundering (AML) regulations risk having their licenses revoked. Having your license revoked is the ultimate punishment as it permanently ceases your company’s existence.
Measures to Keep your Company Compliant
What you must always remember, is that compliance and regulations for Anti-Money Laundering / Combating the Financing of Terrorism (AML / CFT) are not just about avoiding fines; ’they are also about maintaining your financial integrity and safeguarding your business reputation. Something which in some cases could be more detrimental than a fine especially since reputational damage may even result in the dissolution of your company.
Know Your Customer (KYC) Procedures:
Implement thorough KYC procedures to verify the identity of customers and assess their risk profile. Collect and verify relevant identification documents, business information, and beneficial ownership details.
Risk-Based Approach:
Adopt a risk-based approach to customer due diligence (CDD) and background checks. Focus more on higher-risk customers and transactions and allocate resources accordingly.
AML/CFT Policies:
Develop and implement Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) policies that comply with applicable laws and regulations.
Compliance Training:
Ensure all employees, especially those involved in customer onboarding and transaction monitoring, receive comprehensive training on AML/CFT regulations and company policies.
eBOS’s WiseBOS RiSC Solution
A cutting-edge solution will enhance your risk-based compliance both for financial and non-financial institutions. WiseBOS RiSC offers advanced features and streamlined capabilities to help companies minimise their risk of exposure to financial fraud and terrorism-related activities, by comprehensively performing a KYC / KYB and Risk Assessment on their current and potential clients. This solution benefits audit, fiduciary, legal, investment firms, EMIs, banks, and insurance firms. With WiseBOS RiSC, businesses can fulfil their regulatory compliance requirements, enhance their existing compliance processes and strengthen their defences against potential financial and reputational risks.
* Amounts converted from ZAR to USD are approximate and based on the exchange rate at the time this article was drafted.
