ENFORCEMENT OF COMPLIANCE OBLIGATIONS UNDER THE FIC ACT
ICS would like to remind clients that the Financial Intelligence Centre (“the FIC”) or a supervisory body may impose administrative sanctions if it finds that an accountable or reporting institution or any person with an obligation to comply with the Financial Intelligence Centre Act (“the FIC Act”) has not complied with the FIC Act or with a directive issued in terms thereof.
The administrative sanction may take a variety of forms – including restricting the business activities of the institution and/or a financial penalty of up to R10 million for a natural person or up to R50 million for a legal person per instance of non-compliance.
In a recent enforcement action an accountable institution was found guilty of inter alia the following FIC Act related non-compliance: failure to take prescribed identification and verification steps before establishing business relationships with clients, failure to verify information relating to a close corporation or legal entity, failure to keep records of business relationship and transactions of clients, failure to formulate and implement internal rules and failure to provide training to employees. A penalty of R5 million was imposed for this non-compliance, of which R1 million was suspended for five years, provided the accountable institution is not found guilty of a similar contravention.
Administrative sanctions, including financial penalties and the requirement that certain remedial action be taken, were also recently imposed on two banks. A financial penalty of R10 million and a directive to take remedial action to address deficiencies in the following areas were imposed on Deutsche Bank: identifying and verifying customers’ details as well as controls and systems relating to the detection of property associated with terrorists and related activities. A financial penalty of R5 million and a directive to take remedial action to address deficiencies were imposed on Capitec Bank for failure to report cash transactions above R24 999.99 to the FIC.
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