Latest news with #DNFBPs
IOL News
26-05-2025
- Business
- IOL News
Trustworthy: another immediate 'deadline' for trust and company service providers (TCSPs)
South Africa faces a critical deadline to address its greylisting by the FATF, with significant implications for trust and company service providers. This article outlines the necessary compliance measures and the consequences of non-compliance. Image: File photo. More than two years ago, South Africa was found to have insufficiently addressed money laundering and terrorist financing, leading to its greylisting by the Financial Action Task Force (FATF). This greylisting has significant economic and reputational consequences for any country, prompting South Africa to set a deadline of January 2025 to fulfil all requirements for removal from the greylist. Unfortunately, two action items remain unresolved following the latest plenary meetings in France in February 2025. One item requires South Africa to demonstrate a sustained increase in the investigations and prosecutions of serious and complex money laundering, particularly those involving professional money laundering networks/enablers and third-party money laundering, aligned with its risk profile. Additionally, South Africa must show a sustained increase in the effective identification, investigation, and prosecution of the full spectrum of terrorist financing activities, consistent with its risk profile. As a result of missing the deadline, we have now entered our first four-month rolling review cycle (from March to June 2025) with the FATF. In a media statement, Treasury committed to addressing both outstanding action items by June 2025 to facilitate our exit from the greylist by October 2025. With the next reporting deadline approaching, it is unsurprising that we are experiencing increased compliance sanctions from the Financial Intelligence Centre (FIC) and the Financial Sector Conduct Authority (FSCA), aimed at demonstrating to the FATF that sufficient action is being taken against non-compliance. This serves as a stern warning to all TCSPs to comply immediately with the aspects discussed below, at least before the end of May 2025, which will allow the FIC to prepare for the next FATF review in June 2025. Guidance from fines already issued Several Designated Non-Financial Businesses and Professions (DNFBPs), a relatively new category of persons and entities obligated to comply with the FIC Act, have already faced administrative sanctions for non-compliance. The FIC included TCSPs in this new category of 'accountable institutions', as, due to the unique nature of the services they offer, they are vulnerable to abuse by entities seeking to misuse corporate structures to facilitate the movement of illicit funds. These sanctions arose from failures to adhere to FIC directives and the provisions of the FIC Act, such as submitting Risk and Compliance Returns (RCRs) and developing and implementing a Risk Management and Compliance Programme (RMCP). Some published examples include Capital Point Properties (for failing to develop and implement an RMCP, scrutinise clients against the targeted financial sanctions list, and comply with Directive 6, which requires certain accountable institutions to file an RCR), Alpha Trust (for non-compliance with Directive 6, requiring the submission of an RCR), KR Inc (for failing to comply with Directives 1, 2, and 4 regarding registration details on the goAML system, non-compliance with Directive 6, which mandates certain accountable institutions to file an RCR, and for sharing login credentials), the life insurers Sanlam Life and Fedgroup Life (for weaknesses in their money laundering control measures), and most recently Ninety One Fund Managers SA (for having a 'technically deficient' and poorly implemented RMCP, particularly in risk-rating its clients, among other shortcomings of the FIC Act). This list should guide trust and company service providers who have not yet complied with their 'new' obligations to comply immediately, some of which are discussed below. Register with the FIC as 'Accountable Institution' If you or your business qualifies as an 'accountable institution', you are obligated to register with the FIC. Failing to do so does not imply that you will be exempt from oversight. Non-registration will result in sanctions imposed by the FIC. The FIC statistics clearly indicate that many TCSP 'accountable institutions' have not yet registered, including accountants, attorneys, financial advisors, and other service providers offering the envisaged services as a business. Since the FIC's net is quite wide, any service provider dealing with companies and trusts should verify the types of activities they perform against the qualifying criteria set forth by the FIC. Schedule 1 (item 2) to the FIC Act and Public Compliance Communication 6A (PCC 6A) provide practical guidance on this topic. Submit RCR The FIC realised that DNFBPs, as a new 'accountable institution' type, are unaware of the money laundering and terrorist financing risks they face, making this sector and South Africa vulnerable to exploitation by criminals. Therefore, they developed the RCR to address this gap. The FIC believes that RCRs are integral to ensuring that businesses understand how they can be used for laundering proceeds acquired through criminal activities. According to the FIC, 'Filing a RCR is thus central to ensuring that businesses survive and are robust in the fight against financial crime.' The RCR is a questionnaire that assists businesses in identifying the risks they face from money laundering and terrorist financing abuse. The FIC uses its risk and compliance assessment analysis tool to evaluate the RCRs it receives, identifying DNFBPs at higher risk of money laundering and terrorist financing. Directive 6 was issued on March 31, 2023, obligating TCSPs to submit an RCR to the FIC by May 31, 2023. Directive 6 requires legal practitioners, estate agents, trust service providers, company service providers, and casinos to complete and submit their RCRs online via the FIC's website. The deadline for these submissions was May 31, 2023. For those TCSPS who have not yet submitted the RCR, they must do so immediately on the FIC portal. Non-compliance will be dealt with harshly, as they are quoted as saying, 'It is inevitable that the longer the non-compliance persists, the harsher the financial penalties will become.' Submit RMCP All 'accountable institutions', including trust and company service providers, must implement an RMCP. This structured framework of policies, procedures, and controls is designed to identify, assess, and mitigate risks, ensuring that an organisation adheres to relevant laws, regulations, and internal policies. The FIC requires 'accountable institutions' to indicate client types along with the degree of risk for money laundering, terrorist financing, and proliferation financing. This assists TCSPs in applying varying degrees of verification during onboarding and ongoing relationships. The RMCP helps TCSPs understand their business environments while implementing risk mitigation measures and controls to protect their businesses. The risk-based approach includes identifying various client types, determining what additional measures must be in place, and outlining what training their teams need to deal with such behaviours. The RMCP must be documented, kept updated, and implemented. Staff should understand the RMCP, as they are the ones at the coalface of the business. On March 4, 2025, the FIC issued a notification requesting all 'accountable institutions' supervised by it to submit a copy of the documentation describing their RMCP to the FIC on or before the close of business on Wednesday, 12 March 2025, in terms of section 42(4)(a) of the FIC Act 38 of 2001. The FIC advised that failure to comply with this request by March 12, 2025, would constitute non-compliance and might lead to administrative sanctions being imposed, including a financial penalty in terms of section 45C of the FIC Act. TCSPs who have not met the deadline to submit their RMCPs as per the above notification are urged to do so immediately to avoid further penalties. The FIC reminded accountable institutions that non-submission of the RMCP constitutes non-compliance with the FIC Act. The FIC, however, warns 'accountable institutions' not to merely submit a deficient RMCP and assume that will tick the compliance box. The FIC warned that the RMCP will be tested against legislative requirements through inspections and compliance monitoring. Therefore, TCSPs should ensure that the required attention is given when compiling the RMCP. The FIC confirmed in a media statement on May 7, 2025, that 'RMCPs are fundamental to protecting accountable institutions and ultimately, the integrity of our financial system.' The FIC reiterated that 'Accountable institutions who are in default must immediately submit their outstanding RMCPs electronically to the FIC on the goAML platform.' Communication from FIC on goAML goAML is an integrated software solution that the FIC uses for registration, reporting, data collection, analysis, case management, and secure communications. It is essentially the FIC's preferred IT platform for handling its daily operations. 'Accountable institutions' were strongly urged by the FIC to consult and monitor the FIC goAML message board daily (under their Org ID profile as registered with the FIC) to immediately attend to outstanding RMCP and other requests from the FIC. Conclusion South Africa's greylisting signalled that the country's effectiveness in combating financial crimes, such as money laundering and terror financing, was below international standards. This resulted in increased scrutiny from international regulators, along with reputational and economic damages. It is understandable that the government is implementing measures to convince the FATF that sufficient actions are being taken for the country to exit the greylist. If South Africa is not delisted by October 2025, it will be required to continue reporting to the FATF Africa Joint Group every four months until all action items are addressed. This situation would not bode well for the country. The RCRs and RMCPs are critical documentary evidence that the FIC must demonstrate to convince the FATF that the country has a sufficient handle on money laundering and terrorist financing. TCSPs, therefore, have no choice but to comply and visit goAML as a daily routine to stay out of trouble. * Van der Spuy is a Chartered Accountant with a Masters's degree in tax and a registered Fiduciary Practitioner of South Africa®, a Chartered Tax Adviser, a Trust and Estate Practitioner (TEP), and the founder of Trusteeze®, the provider of a digital trust solution. PERSONAL FINANCE
The Citizen
16-05-2025
- Business
- The Citizen
FIC takes a bigger stick to lawyers and estate agents over grey list
These are the two sectors holding up SA's exit from the grey list. The good news is that SA has addressed 20 of the 22 issues that got it onto the list. Foreigners used expensive property to wash their dirty money, but some estate agents 'are now so wrapped up in red tape' that criminals may slip through the net. Picture: AdobeStock The Financial Intelligence Centre (FIC) is carrying out hundreds of inspections and issuing sanctions against estate agents and law offices over their failure to submit risk and compliance reports. SA was placed on the Financial Action Task Force (FATF) grey list in early 2023 for lapses in taking the necessary action to combat money laundering and terrorist financing, with estate agents and legal practitioners identified as two of the higher-risk categories. There is a fear that lawyer and estate agent trust accounts could be used to launder criminal proceeds or finance terrorism. There has been an improvement in compliance rates to around 70% from the 52% for legal practitioners and 42% for estate agents announced in February 2024, but this is still not where it needs to be to remove SA from the grey list. In response to queries from Moneyweb, the FIC says it conducted 165 inspections on estate agents and 242 on legal practitioners over the 2025 financial year. This resulted in sanctions being issued against 87 estate agents and 83 legal practitioners. ALSO READ: Financial Intelligence Centre: Lawyers and estate agents keeping SA on grey list 'South Africa has largely addressed 20 of the 22 action items outlined by the Financial Action Task Force in its action plan for the country. The country's efforts continue to drive South Africa's exit from the grey list,' says the FIC in an emailed response. Other high-risk sectors include high value goods dealers, such as those dealing in precious stones, precious metals and Krugerrands, and trust service providers (such as accountants). These are 'designated non-financial businesses and professions' or DNFBPs that are not traditional financial institutions but are considered to be at risk of being used for money laundering and terrorist financing. These bodies are required to submit regular risk and compliance reports to the FIC to help it monitor and control money laundering and terrorism financing. ALSO READ: Prudential authority fines Absa R10 million for FICA non-compliance SA inching its way off the list In January, it was announced that SA had largely complied with 20 of the 22 issues that got it placed on the grey list in 2023 and was expected to be fully compliant with the FATF requirements by October 2025. National Treasury undertook to ensure that anti-money laundering and counter-terrorism financing supervisors implement follow-up remedial actions 'and that effective, proportionate and dissuasive sanctions are being applied'. The FATF found SA's laws against terrorism financing and money laundering were largely sufficient, but their enforcement was weak. In February this year, the South Gauteng High Court issued a freezing order against two individuals and two entities based on reasonable grounds of suspicion that they had been involved in committing an act of terrorism under the Protection of Constitutional Democracy Against Terrorist and Related Activities Act. Christopher Malan, executive manager for compliance and prevention at the FIC, commented in April that SA had not fully complied with its FATF commitments due to non-financial businesses and practitioners' understanding of their own risk and compliance situation. Estate agents hit back last year, saying that while they supported efforts to improve compliance rates, the FIC appeared to be operating on incorrect data, with many estate agents ceasing to operate without advising the FIC. ALSO READ: FSCA fines Ninety One Fund Managers R3 million for Fica non-compliance The grey list makes it more difficult for SA companies to access overseas capital and imposes higher due diligence standards when dealing with foreign businesses and banks. Research and advisory group Krutham (formerly Intellidex) estimated that this could cost the economy 1% of GDP a year in an optimistic scenario, and 2-3% in a more pessimistic one. Some of the criticism being directed at lawyers and estate agents could be directed at banks, which enabled the flow of billions of rands during state capture. Some estate agents argue that they are now so wrapped up in red tape that criminals are able to slip through the net. Research by Open Secrets revealed a pattern of money laundering by politically connected individuals from Mozambique, the Democratic Republic of Congo and Equatorial Guinea where expensive properties, often bought with public funds, were being purchased in affluent suburbs in Cape Town and Johannesburg. This article was republished from Moneyweb. Read the original here.
Zawya
21-04-2025
- Business
- Zawya
Ministry of Economy inks MoUs with key national entities to boost cooperation in combating money laundering and financial crimes
Abu Dhabi: The Ministry of Economy signed a series of MoUs with several competent national authorities in the field of anti-money laundering and countering terrorism financing, including the Economic Security Centre of Dubai (ESCD) and the Dubai Land Department (DLD). The agreements aim to strengthen national efforts in developing the regulatory infrastructure, enhancing integrity and transparency systems, and improving mechanisms to combat financial crimes in accordance with international best practices. The MoUs also facilitate the exchange of data and information, while supporting the Ministry's supervisory role under the relevant national legislation. The signing ceremony was held on the sidelines of the 'Role of the Designated Non-Financial Businesses and Professions (DNFBPs) Sector in Combating Financial Crimes" summit, which took place recently in Dubai. It was attended by H.E. Abdulla bin Touq Al Marri, Minister of Economy; H.E. Abdulla Sultan bin Awad Al Nuaimi, Minister of Justice; and H.E. Ahmed Al Sayegh, Minister of State. The MoUs were signed by H.E. Abdulla Ahmed Al Saleh, Undersecretary of the Ministry of Economy; H.E. Safeya Hashem Al Safi, Assistant Undersecretary for the Commercial Control and Governance Sector; H.E. Faisal Yousef bin Selaitin, CEO of the Economic Security Center of Dubai; and H.E. Majid Saqr Al Marri, CEO of the Real Estate Registration Sector at the Dubai Land Department, along with other government officials. The initiative is part of continuing efforts to strengthen institutional integration and partnerships to improve monitoring and compliance systems and facilitate the exchange of data among signatories, in support of their shared objectives to counter financial crimes in the UAE. The MoUs establish clearly defined frameworks for technical cooperation, capacity building, and knowledge exchange, as well as secure data sharing mechanisms that ensure confidentiality and compliance with relevant legal and regulatory frameworks. Representatives of the signatory entities affirmed the importance of enhancing national efforts to address the challenges of money laundering, terrorism financing, and the proliferation of weapons, through a sustainable and institutional approach. They emphasized that such efforts support the UAE's readiness for the upcoming mutual evaluation, help ensure high levels of legislative and regulatory compliance and improve efficiencies in addressing cross-border financial crimes. These measures also contribute to achieving sustainable economic growth and improving the country's ranking in global competitiveness indices. The representatives reiterated their full commitment to supporting initiatives that protect the national economy and strengthen financial security.
Gulf Today
19-04-2025
- Business
- Gulf Today
MoE teams up with key national entities to enhance cooperation
The Ministry of Economy signed a series of MoUs with several competent national authorities in the field of anti-money laundering and countering terrorism financing, including the Economic Security Centre of Dubai (ESCD) and the Dubai Land Department (DLD). The agreements aim to strengthen national efforts in developing the regulatory infrastructure, enhancing integrity and transparency systems, and improving mechanisms to combat financial crimes in accordance with international best practices. The MoUs also facilitate the exchange of data and information, while supporting the Ministry's supervisory role under the relevant national legislation. The signing ceremony was held on the sidelines of the 'Role of the Designated Non-Financial Businesses and Professions (DNFBPs) Sector in Combating Financial Crimes' summit, which took place recently in Dubai. It was attended by Abdulla bin Touq Al Marri, Minister of Economy; Abdulla Sultan bin Awad Al Nuaimi, Minister of Justice; and Ahmed Al Sayegh, Minister of State. The MoUs were signed by Abdulla Ahmed Al Saleh, Undersecretary of the Ministry of Economy; Safeya Hashem Al Safi, Assistant Undersecretary for the Commercial Control and Governance Sector; Faisal Yousef bin Selaitin, CEO of the Economic Security centre of Dubai; and Majid Saqr Al Marri, CEO of the Real Estate Registration Sector at the Dubai Land Department, along with other government officials. The initiative is part of continuing efforts to strengthen institutional integration and partnerships to improve monitoring and compliance systems and facilitate the exchange of data among signatories, in support of their shared objectives to counter financial crimes in the UAE. The MoUs establish clearly defined frameworks for technical cooperation, capacity building, and knowledge exchange, as well as secure data sharing mechanisms that ensure confidentiality and compliance with relevant legal and regulatory frameworks. Representatives of the signatory entities affirmed the importance of enhancing national efforts to address the challenges of money laundering, terrorism financing, and the proliferation of weapons, through a sustainable and institutional approach. They emphasized that such efforts support the UAE's readiness for the upcoming mutual evaluation, help ensure high levels of legislative and regulatory compliance and improve efficiencies in addressing cross-border financial crimes. These measures also contribute to achieving sustainable economic growth and improving the country's ranking in global competitiveness indices. The representatives reiterated their full commitment to supporting initiatives that protect the national economy and strengthen financial security. Meanwhile, under the patronage and in the presence of Abdulla bin Touq Al Marri, Minister of Economy, and Ahmed Al Sayegh, Minister of State, the 'Role of the DNFBPs Sector in Fighting Financial Crimes' summit kicked off in Dubai. Organised by the Ministry of Economy and the Executive Office for Control and Non-Proliferation (EOCN), the two-day event, taking place on April 16 and 17, aims to highlight national efforts, underscore the importance of enhanced compliance with international standards, and strengthen cooperation between the public and private sectors in combating terrorism financing and the proliferation of arms. The summit serves as a key platform to raise awareness on the updated national and international requirements set forth by the Financial Action Task Force (FATF), with a focus on customer due diligence and verification procedures in alignment with targeted financial sanctions aimed at preventing terrorism financing and the proliferation of arms. It also seeks to empower the DNFBPs sector, which includes real estate agents and precious metals dealers, to effectively implement the latest regulatory measures. In his opening remarks, Abdulla bin Touq Al Marri, Minister of Economy, emphasized that the UAE, guided by the directives of its wise leadership, has adopted advanced and forward-thinking strategies and legislations to build an integrated national framework to combat money laundering and terrorism financing. These efforts, aligned with global best practices, have significantly bolstered the UAE's global economic reputation, reinforcing its status as a competitive economic hub committed to the highest standards of integrity, transparency, and regulatory excellence in financial and commercial oversight. Bin Touq noted that the UAE has introduced a comprehensive set of legislations and policies aimed at reinforcing its anti-money laundering framework—positioning it among the most advanced legislative systems globally. More than seven key legislations and policies were enacted within a span of just four years, specifically between 2020 and 2024. Furthermore, the UAE remains steadfast in its commitment to supporting global efforts to combat financial crimes by adhering to the standards of the Financial Action Task Force (FATF) and deepening cooperation with partners at both the regional and international levels. WAM
Web Release
19-04-2025
- Business
- Web Release
Ministry of Economy inks MoUs with key national entities to boost cooperation in combating money laundering and financial crimes
The Ministry of Economy signed a series of MoUs with several competent national authorities in the field of anti-money laundering and countering terrorism financing, including the Economic Security Centre of Dubai (ESCD) and the Dubai Land Department (DLD). The agreements aim to strengthen national efforts in developing the regulatory infrastructure, enhancing integrity and transparency systems, and improving mechanisms to combat financial crimes in accordance with international best practices. The MoUs also facilitate the exchange of data and information, while supporting the Ministry's supervisory role under the relevant national legislation. The signing ceremony was held on the sidelines of the 'Role of the Designated Non-Financial Businesses and Professions (DNFBPs) Sector in Combating Financial Crimes' summit, which took place recently in Dubai. It was attended by H.E. Abdulla bin Touq Al Marri, Minister of Economy; H.E. Abdulla Sultan bin Awad Al Nuaimi, Minister of Justice; and H.E. Ahmed Al Sayegh, Minister of State. The MoUs were signed by H.E. Abdulla Ahmed Al Saleh, Undersecretary of the Ministry of Economy; H.E. Safeya Hashem Al Safi, Assistant Undersecretary for the Commercial Control and Governance Sector; H.E. Faisal Yousef bin Selaitin, CEO of the Economic Security Center of Dubai; and H.E. Majid Saqr Al Marri, CEO of the Real Estate Registration Sector at the Dubai Land Department, along with other government officials. The initiative is part of continuing efforts to strengthen institutional integration and partnerships to improve monitoring and compliance systems and facilitate the exchange of data among signatories, in support of their shared objectives to counter financial crimes in the UAE. The MoUs establish clearly defined frameworks for technical cooperation, capacity building, and knowledge exchange, as well as secure data sharing mechanisms that ensure confidentiality and compliance with relevant legal and regulatory frameworks. Representatives of the signatory entities affirmed the importance of enhancing national efforts to address the challenges of money laundering, terrorism financing, and the proliferation of weapons, through a sustainable and institutional approach. They emphasized that such efforts support the UAE's readiness for the upcoming mutual evaluation, help ensure high levels of legislative and regulatory compliance and improve efficiencies in addressing cross-border financial crimes. These measures also contribute to achieving sustainable economic growth and improving the country's ranking in global competitiveness indices. The representatives reiterated their full commitment to supporting initiatives that protect the national economy and strengthen financial security.
