The Financial Intelligence Centre Amendment Act 1 of 2017 (the Amendment Act), was published in Government Gazette 40821 of 2 May 2017.
Attorneys, as accounting institutions, are required to comply with the new provisions introduced by the Amendment Act and must familiarise themselves with the relevant provisions, in particular, the insertion of ss 21A to 21H.
Section 21A relates to understanding and obtaining information on business relationships. It states that:
‘When an accountable institution engages with a prospective client to establish a business relationship as contemplated in section 21, the institution must, in addition to the steps required under section 21 and in accordance with its Risk Management and Compliance Programme, obtain information to reasonably enable the accountable institution to determine whether future transactions that will be performed in the course of the business relationship concerned are consistent with the institution’s knowledge of that prospective client, including information describing—
(a) the nature of the business relationship concerned;
(b) the intended purpose of the business relationship concerned; and
(c) the source of the funds which that prospective client expects to use in concluding transactions in the course of the business relationship concerned.’
Section 21C relates to ongoing due diligence and states that every accountable institution must conduct ongoing due diligence regarding a business relationship which includes –
- monitoring of transactions undertaken throughout the course of the relationship, including, where necessary—
- the source of funds, to ensure that the transactions are consistent with the accountable institution’s knowledge of the client and the client’s business and risk profile; and
- the background and purpose of all complex, unusual large transactions, and all unusual patterns of transactions, which have no apparent business or lawful purpose; and
- keeping information obtained for the purpose of establishing and verifying the identities of clients pursuant to sections 21, 21A and 21B, up to date.
The Amendment Act also introduces additional requirements in relation to foreign prominent public officials and domestic prominent influential persons. It now requires accountable institutions, among others, to –
- obtain senior management approval for establishing the business relationship;
- take reasonable measures to establish the source of wealth and source of funds of the client; and
- conduct enhanced ongoing monitoring of the business relationship.
Practitioners should also be aware of the implications of the change from a rules-based to a risk-management approach in s 42 (2). This section states:
‘(2) A Risk Management and Compliance Programme must—
(a) enable the accountable institution to—
(iv) mitigate; and
(v) manage, the risk that the provision by the accountable institution of products or services may involve or facilitate money laundering activities or the financing of terrorist and related activities;’
It is anticipated that a separate contextualised industry-specific approach guideline prepared by the FIC in co-operation with the profession will be published and provided to attorneys in due course.
To download the FIC Amendment Act click here.