South Africa Takes Measures to Enhance Financial Institution Security

In a bid to combat money laundering, terrorist financing, and proliferation financing, South African financial institutions have been implementing enhanced security measures in line with the Financial Intelligence Centre Act (FIC Act). The FIC has issued directives and guidance notes to ensure that accountable institutions adhere to anti-money laundering, counter-terrorism financing, and counter-proliferation financing regulations.

Registration is Key

Before submitting regulatory reports, financial institutions must first register with the Financial Intelligence Centre. Registration is free and can be done through the FIC’s online system. Recent amendments to the FIC Act have expanded the list of accountable institutions that require registration, including non-financial businesses and professions such as trust and company service providers, credit providers, and high-value goods dealers.

Three Main Reporting Streams

Accountable institutions have three primary reporting obligations:

Cash Threshold Reports (CTR)

• Financial institutions must submit a CTR when a cash transaction exceeds R49,999.99.
• This report is used to monitor large cash transactions that may be indicative of money laundering or other illicit activities.

Suspicious Transaction Reports (STR)

• Institutions must report any suspicious transactions or activities that may involve money laundering, terrorist financing, or financial sanctions contraventions.
• STRs are crucial in identifying and preventing potential financial crimes.

Terrorist Property Reports (TPR)

• Institutions must file a TPR if they possess property or are in control of property belonging to a person or entity on the United Nations Security Council targeted financial sanctions list.
• This report helps to prevent terrorist organizations from accessing financial resources.

International Funds Transfer Reports (IFTR)

Certain accountable institutions have an obligation to submit IFTRs with the FIC. These reports require additional guidance and clarification from the FIC.

Fines and Penalties

Failure to comply with these regulations can result in significant fines and penalties, including imprisonment for up to 15 years. Financial institutions must take their reporting obligations seriously to avoid any potential repercussions.

The South African government’s efforts to enhance financial institution security demonstrate its commitment to preventing illicit activities and protecting the country’s financial system.