Latest news with #Fica
The Citizen
5 days ago
- Business
- The Citizen
The actual cost of non-compliance with Fica
'Any accountable institution, whether in property, legal, crypto or lending, is at risk if compliance lapses occur.' In the past 18 months, institutions in banking, legal, and financial services have faced steep penalties for non-compliance with the Financial Intelligence Centre Act (Fica). Some South African commercial banks have been sanctioned with fines ranging from R7.7 million to more than R50 million. These are not outliers, they reflect a clear regulatory shift toward stricter enforcement. Sameer Kumandan, MD of SearchWorks360, said that while much has been said about Fica obligations, less attention is paid to what happens when businesses fall short. 'The penalties are not limited to financial institutions. Any accountable institution, whether in property, legal, crypto or lending, is at risk if compliance lapses occur.' ALSO READ: FSCA fines 3 financial services providers R1.2 million for Fica non-compliance How Fica penalties are determined He said the type of punishment depends on the severity of the violation. Regulators apply a structured framework that considers both mandatory and discretionary factors. 'These include the nature, duration, seriousness and extent of the contravention, as well as whether the conduct was intentional, reckless or negligent. 'The regulator will also assess whether the entity gained any financial or commercial benefit from the non-compliance and if there was any remedial action taken once the issue was identified.' A business's compliance history matters too. Institutions with prior contraventions or those seen as repeat offenders can expect harsher sanctions, as can those found to have obstructed investigations or withheld key information. Fica sanctions Kumandan said sanctions range from a written caution or public reprimand to a remediation directive, restriction or suspension of business activities, and administrative fines of up to R10 million for individuals and R50 million for companies. For more serious breaches, particularly those involving an element of intent, criminal charges may be brought, with potential fines of up to R100 million or imprisonment up to 15 years. Senior managers, directors and employees involved in the breach may be held personally liable. ALSO READ: Prudential authority fines Absa R10 million for FICA non-compliance Common non-compliance issues 'Most Fica penalties stem from recurring failures such as inadequate or generic risk management and compliance programmes (RMCPs), poor customer due diligence, incomplete recordkeeping, failure to submit reports like cash threshold reports and insufficient training,' said Kumandan. 'These are not technicalities – they are central to the act and form the basis of most enforcement actions. In one case, a legal firm was fined R7.7 million for failing to implement an RMCP or train its staff. 'A financial services provider was penalised for failing to report suspicious transactions in a timely manner. These are the kinds of 'basic' oversights that now carry serious consequences.' The pressure is industry-wide He added that the uptick in enforcement isn't limited to large financial institutions. In recent months, law firms, insurers, financial advisers and crypto platforms have all faced enforcement actions. 'Fica applies across sectors and smaller firms are not immune. If you deal with money, you are accountable.' Avoiding penalties requires more than good intentions Fortunately, regulated entities have access to automated compliance platforms that facilitate the prevention of fraud, money laundering and regulatory breaches. He said these tools reduce manual oversight, simplify regulatory reporting and ensure Popia-compliant data handling. They also automate Know Your Customer (KYC)/Know Your Business (KYB) verification processes and can generate suspicious transaction and compliance reports as requested by regulators. 'One of the big selling points of automating Fica compliance is ongoing monitoring. Often, a business will conduct its due diligence at the start of a relationship with a client, only for that client to engage in illicit and illegal activities down the line. 'Ongoing monitoring helps accountable institutions to assess and manage risks continuously, during the onboarding process and throughout the business relationship. 'By tracking client profiles daily, accountable organisations keep tabs on all transactions as they happen and they are alerted to any changes that might indicate a compliance risk.' NOW READ: The risks of doing business with politically exposed persons
Daily Maverick
16-05-2025
- Business
- Daily Maverick
Suspected crime boss Stanfield's wife, Nicole Johnson, spends R5m on Sea Point flat while in prison
Nicole Johnson, the wife of suspected organised crime boss Ralph Stanfield and herself accused of racketeering and helping run a violent criminal enterprise, bought an unbonded R5-million flat on the Atlantic Seaboard from a renowned Cape Town property developer. The transaction raises questions about the extent to which property deals remain vulnerable to money laundering, especially in a time of increased focus on estate agents and lawyers meeting anti-money laundering obligations. Investigations by amaBhungane have highlighted a legal loophole whereby developers who make direct sales without using estate agents as intermediaries seemingly do not have to be registered with the Financial Intelligence Centre (FIC) as accountable institutions. These developers, therefore, have no obligation to perform any due diligence on clients, although they do still need to report transactions they have reason to believe are suspicious. While the criminal reputation of Stanfield and Johnson precedes them, neither the conveyancers, Smith Tabata Buchanan Boyes (STBB), nor the property developer, Blok, which was directly involved in last year's sale, appear to have been put off by the couple's notoriety or the fact that Johnson purchased her Sea Point flat while in prison awaiting trial. Johnson and Stanfield, who have been charged under the Prevention of Organised Crime Act, have been held in Cape Town's Pollsmoor and Brandvlei prisons respectively since their highly publicised arrest in September 2023. They were arrested at their multimillion-rand Constantia home in Cape Town on suspicion of running a criminal enterprise, which has allegedly ensnared several senior local government officials. Collectively they face more than 100 criminal charges, including racketeering, money laundering, corruption, fraud, theft, extortion, murder, attempted murder and the illegal possession of firearms and ammunition. Some of the charges relate to their alleged involvement in a R1-billion social housing development tender fraud scheme for the construction of homes in some of Cape Town's poorest communities. Johnson runs numerous companies, including Glomix House Brokers (GHB), which the couple allegedly used to secure contracts linked to the tender. In March 2024 the National Treasury blacklisted GHB from doing business with the government for 10 years. The blacklisting was loudly trumpeted by the City of Cape Town as a major success in its fightback campaign against the construction mafia, which for years has laid siege to its infrastructure development projects. AmaBhungane has learnt that six months later, on 2 September 2024, Johnson bought a two-bedroom apartment in Sea Point from Blok, one of Cape Town's most renowned urban renewal property developers. She was able to do this while sitting in Pollsmoor as a prisoner awaiting trial. While amaBhungane is not suggesting that STBB or Blok failed to comply with any Financial Intelligence Centre Act (Fica) money-laundering reporting obligations, or that the money Johnson used to buy her flat was from the proceeds of crime, the sale shines a light on estate agents' – and potentially property developers' – compliance levels with laws to combat money laundering and terrorism financing, as well as the current difficulties the Financial Intelligence Centre (FIC) faces in ensuring such compliance and the gaps in legislation specifically designed to combat these crimes. The source of the money, as well as whether it was paid directly by Johnson from her bank account or via a third party, is unknown. Her lawyer, Luzuko Guma, did not respond to amaBhungane's email and WhatsApp requests for comment. Blok and STBB would not discuss any details of the transaction, citing client confidentiality and FIC secrecy provisions while insisting that they had complied with their obligations. As we'll see, however, what these were in the case of Blok may be somewhat unclear. The sale Since its founding in 2014 by father and son Marco and Jacques van Embden, Blok has become known for its award-winning projects, with the company specialising in high-end compact apartment developments in Cape Town's City Bowl and Sea Point. Of the company's 20 developments, it was its Eighty2 on M apartment building that caught Johnson's eye. According to the company's website, the block on Sea Point's Main Road is an 'apartment hotel… where luxury meets sustainability' and offers 'bold architectural design, energy-efficient living spaces and community-oriented features'. The majority of the apartments in the building are rented out as short-term stays. While the exact details of the transaction through which Johnson purchased her eighth-floor unit facing Lion's Head and Signal Hill are unknown, what amaBhungane has gleaned is that she paid R5,016,000 for the 77m² flat, that the purchase was unbonded and made through a cash transfer, and that the unit was registered in her name on 20 November 2024. Property records show that Johnson bought the unit from Blok's Urban Living 4, which is registered as a separate business entity and which developed the Eighty2 on M apartment building. When developing apartments, Blok appears to register separate business entities. The company's registered estate agency business, Blok Urban Apartment Living (UAL), is responsible for marketing and facilitating the sale of units in the group's different developments. In trying to unpack the transaction and determine whether the financial reporting legislation was complied with, amaBhungane looked at whether Blok is registered with the FIC as an accountable institution. Accountable? Fica compels accountable institutions to carry out in-depth know-your-client analyses, understand the nature of their clients' different business relationships, alert the FIC to any suspicious transactions and, importantly, assess, mitigate and report potential money laundering or terror financing risks their businesses may face from transactions. Compliance is crucial in the government's effort to remove SA from the global Financial Action Task Force (FATF) grey list. The FATF grey list identifies countries that have deficiencies in their legislative systems that hamper the combating of money laundering and terror financing. SA was placed on the grey list in February 2023 and in February of this year, the National Treasury announced that it aimed to have SA removed from the list by October. One of the biggest stumbling blocks in removing SA from the list is the lack of successful prosecutions of money laundering cases, as well as poor Fica compliance by certain accountable institutions. In April, the FIC complained in a press release that it was struggling to get estate agents and lawyers to comply with all important Fica risk and compliance reporting obligations. The problem is compounded by a gap in the legislation. Under Fica, estate agencies are 'accountable institutions' but property developers who sell units directly to buyers without using estate agents as intermediaries fall outside the current definitions. That gap was partially closed with the repeal of the former Estate Agency Affairs Act and its replacement in February 2022 with the Property Practitioners Act, which includes property developers that perform estate agency activities by selling their developments directly to buyers. Fica, however, still needs to be amended to include the wider definition of 'property practitioners'. Back to Blok This legal blurriness was evident in our attempts to get clarity from Blok as to what extent it had considered – or even recognised – the potential red flags of a cash sale to Johnson, a prisoner awaiting trial. STBB and Blok sidestepped detailed questions, citing Fica non-disclosure provisions and the Protection of Personal Information Act. STBB director Steven Borwick, responding on behalf of Blok, said that 'in the event that our client had incurred an obligation to report an activity associated with Ms Johnson to the FIC, it will [in] any event, be precluded … by the FIC Act from disclosing such a fact to anyone. To do so constitutes a criminal offence …' Questioned on whether Blok had any Fica responsibilities, Borwick said the specific development company, Blok Urban Living 4, was 'not an accountable institution in terms of the FIC Act'. He said STBB is registered with the FIC as an accountable institution and that the company takes its responsibilities seriously. Borwick said Blok's marketing arm, UAL, provided the company with its estate agency services, but it is not clear whether UAL was involved in the Johnson transaction and, initially at least, amaBhungane was not able to get Blok to confirm that UAL was registered with the FIC. A search of the Property Practitioners Regulatory Authority website shows that UAL is a registered estate agency. As such, Fica requires, if not Blok as a whole, then at least UAL to be registered as an accountable institution. Eventually Borwick confirmed this, noting: 'I am instructed the entity is registered with FIC, registration took place in approximately 2018. Blok will not comment on business strategy and we cannot disclose details of a specific transaction without all parties' consent. No further emails or calls will be responded to.' When amaBhungane approached the FIC with the same question, the entity threw up a bureaucratic wall, saying that its register of accountable institutions was 'not a public registry'. 'The purpose of the registry … is to facilitate [the] regulation of accountable institution compliance with the FIC Act, including with their reporting obligations, in line with the FIC's mandate. 'As such, the FIC is obliged to maintain [the] confidentiality of the regulatory information that is provided to it. Furthermore, the FIC Act provides for the protection of the confidential information which the FIC holds.' This legally questionable stance, which precludes the public from knowing whether companies are complying with their mandatory responsibility to register, helps no -one – except perhaps people like Johnson. DM
The Citizen
08-05-2025
- Business
- The Citizen
FSCA fines Ninety One Fund Managers R3 million for Fica non-compliance
Fica aims to combat money laundering and terrorism financing and other related criminal activities. All accountable institutions must comply. The FSCA has fined Ninety One Fund Managers R3 million for Fica non-compliance and directed the company to fix the identified contraventions and also warned it against future breaches. The Financial Sector Conduct Authority (FSCA) decided to take administrative action against Ninety One Fund Managers, a registered manager of collective investment schemes in terms of the Collective Investment Schemes Control Act and an accountable institution under the Financial Intelligence Centre Act (Fica) after an inspection. The FSCA is responsible for supervising and enforcing compliance with Fica by managers of collective investment schemes. ALSO READ: FSCA fines 3 financial services providers R1.2 million for Fica non-compliance FSCA inspection at Ninety One showed Fica non-compliance The FSCA conducted an inspection of Ninety One in terms of section 45B of Fica in September 2023 as part of its ongoing supervisory activities and found that Ninety One was in breach of sections 42(1) and (2) of Fica. This section requires accountable institutions to develop, document, maintain and implement a Risk Management and Compliance Programme to identify, assess and mitigate money laundering and terrorist financing risks. The FSCA says while Ninety One had developed a programme, it failed to implement it effectively, particularly regarding the risk rating of its clients. The programme was also technically deficient and did not adequately address these issues: Performing customer due diligence under sections 21, 21A, 21B and 21C when suspicious or unusual activity is identified (section 42(2)(j)); and determining whether a transaction is reportable as related to terrorist financing (section 42(2)(o)). According to these sections, accountable institutions must develop, document, maintain and implement a risk management and compliance programme for anti-money laundering, counter-terrorist financing and proliferation financing. The programme must outline how an accountable institution will mitigate its anti-money laundering, counter-terrorist financing and proliferation financing risks and ensure compliance with Fica. ALSO READ: FSCA dishes out fines for R2.1 million, R1.6 million and R200 000 FSCA inspection also found Ninety One did not verify and identify clients In addition, the FSCA found that Ninety One also did not comply with the provisions of section 21, 21B and 21C that require accountable institutions to identify and verify the identity of clients and beneficial owners and conduct ongoing customer due diligence. Fica requires accountable institutions to conduct customer due diligence, which includes identifying and verifying clients, obtaining information on business relationships, conducting ongoing due diligence, and establishing whether the clients are politically exposed persons. At the time of inspection, the FSCA says Ninety One did not adequately identify or verify some clients and their beneficial owners, nor conducted the required ongoing due diligence. Ninety One then lodged an appeal with the Fica Appeal Board after the FSCA imposed the administrative sanction of R3 million in November 2024. The FSCA says Ninety One disputed the findings relating to customer due diligence. 'However, after further constructive engagements between the FSCA and Ninety One, the company agreed to settle the matter, which was confirmed as an order of the Appeal Board in terms of section 45D(7) of FICA in April 2025. The appeal has since been withdrawn.' ALSO READ: FSCA fines Mika Finansiële Dienste R1.1 million for FICA non-compliance FSCA agreed to suspend part of Ninety One's fine Due to Ninety One's remedial actions, the FSCA agreed to suspend R500 000 of the R3 million financial penalty for a period of three years, conditional upon full remediation and sustained compliance with relevant provisions of Fica during the suspension period. The FSCA says it views the breaches identified at Ninety One as serious, especially considering the size, complexity and risk exposure of its business as well as its position and impact in the South African market. 'An effective a Risk Management and Compliance Programme is essential not only for protecting institutions from financial crime, but also for safeguarding the integrity of the broader South African financial system. 'Proper due diligence of all clients is crucial to help identify and mitigate against suspicious and criminal elements from infiltrating the financial system. Financial institutions operating within large, international financial services groups are expected to demonstrate a heightened level of vigilance in this regard,' the FSCA says in a statement. 'This sanction serves as a reminder that the FSCA will not tolerate non-compliance with Fica. All accountable institutions are urged to continually review and enhance their anti-money laundering and terrorist financing controls at the highest levels and conduct thorough risk assessments on a regular basis. Failure to do so will result in firm regulatory action.' ALSO READ: FSCA's Regulatory Actions Report shows impressive numbers of enforcement Fica and the Financial Action Task Force The Financial Action Task Force (FATF) greylisted South Africa in February 2023 due to its failure to comply with FATF standards and measures to combat illicit financial flows, terrorist funding and potential threats to the integrity of the global financial system. FATF is an intergovernmental body established in 1989 by the ministers of its member jurisdictions to protect financial systems and the broader economy from threats of money laundering and the financing of terrorism and proliferation, thereby strengthening financial sector integrity and contributing to safety and security.
The Citizen
05-05-2025
- Business
- The Citizen
A guide for property buyers and sellers: This is why your estate agent asks so many questions
Under Fica, estate agents are obligated to establish and verify the identity of their clients before concluding financial transactions with them. When buying or selling property, estate agents usually ask many questions about your financial position. This can be headache for many people, however, there is a compelling reason why this is done. Paul Stevens, CEO of Just Property, said many people are puzzled when they realise how many personal details are required. But there is a clear reason behind the requests for identification documents, proof of address and financial records. ALSO READ: SA's six most popular provinces where people want to live Fica's role in the property sector The Financial Intelligence Centre Act (Fica) was introduced in July 2003 to fight financial crimes such as money laundering, tax evasion, terrorist activities and financing of weapons of mass destruction. 'How, you may ask, does this have anything to do with me buying or selling my property?' Stevens said that before the introduction of Fica, the real estate sector was susceptible to financial crimes, especially money laundering and terrorism financing risks, because criminals were able to use property transactions as a means to easily integrate illicit funds into the legal economy, while creating a safe and often lucrative investment for themselves. Documents needed when buying property He adds that under Fica, estate agents are obligated to establish and verify the identity of their clients before concluding financial transactions with them. 'This means that without Fica verification an agent may not accept a mandate from a seller, nor may they conclude a sale agreement. If they do not comply, then they face penalties and legal consequences.' Common documents requested: A certified copy of your ID document or passport to prove your identity. A utility bill – not older than three months – or lease agreement to confirm your residential address. Your tax number to prove you are registered with South African Revenue Services (Sars). Confirmation of your bank account. Proof of the source of funds to be used to finance the transaction. 'If you are self-employed or run your own business, you may have to supply the agent with supplementary information.' ALSO READ: More South Africans buying houses for less than R700k. Here's why Sharing of documents Stevens said that personal details of clients will be kept safe as estate agents are bound by strict confidentiality. 'Your documents will only be shared with necessary parties, such as the conveyancing attorney handling the sale of the property or the bank processing your bond.' He highlighted that in 2024, the Financial Intelligence Centre (FIC) updated its risk assessment guidelines for legal practitioners and estate agents, significantly expanding the risk factors estate agents must consider in property transactions. 'The revised guidelines, based on insights from the Financial Action Task Force and regulatory reports, outline 13 key risk indicators. 'These include clients refusing to provide identification, accepting third-party payments from jurisdictions with weak anti-money laundering controls, and tenants hesitating to grant agents access to rental properties.' Estate agents in Cape Town Stevens added that the Financial Action Task Force and regulatory reports also highlight the connection between financial crimes and high-value properties, emphasising geographic risks. 'For example, estate agents operating in affluent areas such as Franschhoek, Stellenbosch, Cape Town's Atlantic Seaboard and Constantia are advised to implement stricter measures to mitigate money laundering and terrorist financing risks.' In accordance with the above and with the rules set down by the Property Practitioners Regulatory Body (PPRA) and Fica, estate agents are obliged to report any suspicious or unusual transactions to FIC. 'Such transactions could include reluctance to provide information, unusual funding sources and transactions that appear to be above the client's means. 'Deposits paid by third parties and purchases made in the name of third parties are also red flags.' NOW READ: Thinking of buying your first home, here are five key issues to consider
Yahoo
30-04-2025
- Yahoo
FBI and Chilean police take down international gang of thieves
By Alexander Villegas SANTIAGO (Reuters) - Chilean police forces, aided by the FBI, took down an international gang of thieves that carried out robberies in the United States, authorities said on Wednesday. The raid, codenamed "Operation Pennsylvania," took place across dozens of homes in Santiago on Tuesday night and led to the arrests of 23 people and seizure of 1.3 billion pesos ($1.36 million) worth of goods and real estate, according to police. "This phenomenon of international thieves has regretfully existed in our country for many years, but it's unfortunately been on the rise recently," prosecutor Eduardo Baeza said during a press conference, adding that they historically operated in Europe but have been focusing more on the United States recently. Chileans have been arrested in recent high-profile robberies, including the theft of U.S. Homeland Security Secretary Kristi Noem's purse in a Washington restaurant this month and a series of break-ins to the homes of professional athletes, including Kansas City Chiefs football player Travis Kelce, boyfriend of pop star Taylor Swift. Johnny Fica, head of the Investigative Police of Chile's (PDI) money and asset laundering division, said many of the detainees had no criminal records in Chile but were career criminals abroad that laundered assets in Chile. Fica said the investigation began last year and was carried out with information from the FBI. Images from the raid show drawers filled with iPhones, luxury watches, cars, purses and shoes. "What you see is part of a life of luxury they had here in Chile. A lot of them liked to show off," Fica said, adding that many of the groups were family or close-knit units. "Their goal was clear, they wanted to enjoy the profits of their crimes in this country and they didn't skimp on spending because they felt like they had, until now, impunity."
