Risk Management and Compliance Programme for legal practitioners
In terms of the Financial Intelligence Centre Act (FICA), a practitioner who practices as defined in section 1 of the Attorneys Act, 1979 are accountable institutions.
The erstwhile law societies, as contemplated in section 56 of the Attorneys Act, 1979 (Act 53 of 1979 are listed as the supervisory bodies for attorneys in terms of Schedule 2 of FICA. In a communicated dated 8 January 2020, the Legal Practice Council, among other, indicated that:
‘The Financial Intelligence Centre (the Centre) advised the Legal Practice Council, as the successor to the Law Societies, that the Minister of Finance had decided, prior to the LPC coming into being on 1 November 2018, to remove the Law Societies from Schedule 2 to FICA and that the Centre would take over that supervisory function.
The amendment to Schedule 2 has been delayed, but the Centre asked the Council to enter into a Memorandum of Understanding in terms of which the Council delegates its powers to the Centre until such time as the amendment takes place.
The Council agreed to enter into such an MOU, and this was signed by the LPC on 5 November 2019, on which date it took effect.
Attorneys should therefore note that the Centre is now the entity that supervises compliance by attorneys with FICA.”
Whilst amendments to FICA are still pending, the LSSA reminds attorneys that:
1 . All practising attorneys[1] are in terms of section 43B of FICA required to:
a. register as accountable institutions with the Financial Intelligence Centre. For more information on how to register, please see: https://www.fic.gov.za/Compliance/Pages/Registration.aspx;
b. notify the Centre in writing within 90 days of any changes to the particulars furnished to the Centre;
2. The LPC requires proof of registration in terms of FICA (i.e.: ORG ID) when opening a legal practice; Legal practitioners must, in support of the application for the fidelity fund certificate, confirm its annual statement on trust accounts, that it is registered as an accountable institution in terms of FICA.
3. Section 42 of FICA provides that attorneys, as accountable institutions, must: develop, document, maintain and implement a Risk Management and Compliance Programme for anti-money laundering and counter-terrorist financing. The Programme must enable the attorney to: identify, assess, monitor, mitigate and manage the risk that the provision of services rendered by the attorney may involve or facilitate money laundering activities or the financing of terrorist and related activities.
4. Legal practitioners must submit regulatory reports as required, amongst other, in terms of sections 28 and 29 of FICA, i.e. cash threshold reports and suspicious and unusual transaction reports to the Centre.
The LSSA has prepared guidelines for attorneys and firms to help them prepare their unique Risk and Management Compliance Programmes, which can be accessed by clicking here.
[1] In its 2020/21 Annual Report, the FIC states that attorneys register with it based on the number of main businesses and branch offices, rather than the individual practitioners active in each office or branch.
