South Africa’s Battle Against Financial Crimes: Best Practices for Reporting

In a bid to combat money laundering, terrorist financing, and proliferation financing, South African businesses have a critical role to play in ensuring their services are not exploited by criminals. The Financial Intelligence Centre Act (FIC Act) requires accountable institutions to file regulatory reports with the Financial Intelligence Centre (FIC), which is central to the development of financial intelligence used by law enforcement agencies.

Registering Before Reporting

Step 1: Register Online

The first step for accountable institutions is to register with the FIC, a free process that must be done via the online registration and reporting system. Recent amendments have added new sectors, including designated non-financial businesses and professions (DNFBPs) such as trust and company service providers, credit providers, and crypto asset service providers.

What You Need to Register

Online access to the FIC’s registration and reporting system
Company or business information
Proof of identity and address

Reporting Obligations

Once registered, accountable institutions can discharge their FIC Act reporting obligations. The three main regulatory reporting streams are:

1. Cash Threshold Reports (CTRs)

An institution must file a report when a cash transaction exceeds the prescribed threshold of R49 999.99.

Cash transactions exceeding the threshold require a CTR
Threshold applies to all currencies, including foreign exchange
Institutions must keep records of CTRs for 5 years

2. Suspicious and Unusual Transaction Reports (STRs)

Where an institution suspects money laundering, terrorist financing, or financial sanctions, they must report this suspicion to the FIC as an STR.

Suspicious transactions require immediate reporting
Institutions must have a reason for suspecting money laundering
Reporting must be done within 5 days of transaction

3. Terrorist Property Reports (TPRs)

An institution must submit a TPR when they possess property of a person or entity listed on a United Nations Security Council targeted financial sanctions list.

Institutions must identify and report terrorist assets
Reporting must be done within 5 days of identification
Property includes cash, assets, and other valuables

International Funds Transfer Reports (IFTRs)

Only specific accountable institutions, such as authorised dealers and the South African Post Bank, are required to file IFTRs with the FIC.

What You Need to File an IFTR

Institution must be registered for IFTR reporting
Transaction value exceeds R100 000 or is equivalent in a foreign currency
Transaction involves an authorised dealer or other specified institution

Guidelines for Reporting

The FIC has issued guidance notes for each type of report, which provide detailed information on the requirements and procedures. Accountable institutions must evaluate transactions and client behaviour when determining whether a transaction or activity is suspicious or unusual.

What to Consider When Evaluating Transactions

Client risk assessment
Transaction patterns and anomalies
Country risk assessment
Compliance with laws and regulations

Consequences of Non-Compliance

Failure to submit reports as required can result in severe consequences, including fines and reputational damage. Furthermore, disclosing the fact that a report was submitted or its content would amount to ’tipping off’, which is an offence under the FIC Act.

What You Need to Know

Institutions must comply with reporting requirements
Failure to submit reports can result in penalties
Disclosing report information is prohibited