The Financial Intelligence Centre Act, 2001 (Act 38 of 2001), empowers the FIC to apply measures designed to identify the proceeds of crime, combat money laundering, terrorist financing and financing of the proliferation of weapons of mass destruction.
As the country’s financial intelligence unit, the FIC implements its role in the country’s framework for anti-money laundering, countering the financing of terrorism and proliferation (AML, CFT and CPF). The FIC functions include to:
The FIC Act works in concert with the POC Act and POCDATARA Act to combat and criminalise money laundering, the financing of acts of terrorism, thereby making the country safer for all citizens.
The regulations to the FIC Act, called the Money Laundering and Terrorist Financing Control Regulations of 20 December 2002, prescribe the manner, process and information to be submitted in respect of regulatory reports submitted to the FIC.
FIC Act amendments
Since 2003, the FIC Act and the Money Laundering and Terrorist Financing Control Regulations have undergone various amendments contributing to improving South Africa’s legislative framework for anti-money laundering, countering the financing of terrorism and proliferation financing (AML, CFT and CPF).
In 2022, the FIC Act was amended as part of the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act, 2022 to address the technical deficiencies identified in the 2021 Mutual Evaluation Report of South Africa by the Financial Action Task Force.
This round of amendments expanded the mandate of the FIC and the range of information made available for the organisation to do its work. Also included were changes to definitions such as beneficial owner and the consistent inclusion of proliferation financing. The FIC’s mandate was expanded to include production of forensic evidence relating to the flow of financial transactions. The amendments authorise the FIC to request information from or access to any database held by any organ of state, as well as to have access to information contained in a register that is kept by an organ of state.
Amendments to the FIC Act Schedules
In 2022, amendments were made to Schedules 1, 2 and 3 to the FIC Act to address the scope of coverage weaknesses identified in the 2009 and 2019 FATF mutual evaluations of South Africa. These amendments were brought into operation on 19 December 2022. The increased sectoral coverage, that is, the inclusion of new accountable institutions, enhances AML, CFT and CPF supervision and monitoring. In addition, the amendments brought about changes to the FIC Act compliance supervision of accountable institutions. The FIC oversees and enforces FIC Act compliance of the FIC Act among the non-financial businesses and professions listed in Schedule 1 of the FIC Act, including the gambling sector, estate agents, legal practitioners, and high-value goods dealers. The credit providers sector and crypto asset service providers also fall within the FIC’s supervisory function. Collectively, these sectors and professions are called the designated non-financial businesses and professions (DNFBPs).
Amendments to the MLTFC Regulations on cash threshold reporting
The threshold and other aspects related to reporting cash transactions contained in the Money Laundering and Terrorist Financing Control (MLTFC) Regulations were amended with effect from 24 November 2022. The new prescribed threshold amount of R49 999.99 was introduced, meaning all cash transactions of R50 000 and above must be reported. Up to 24 November 2022, the threshold was R24 999.99. The reporting of cash threshold aggregation was removed. The period within which cash threshold transactions are to be reported was extended from two to three business days from the date on which a transaction exceeding the prescribed limit has taken place. The increase in the CTR threshold, the removal of reporting CTR aggregation and extending the period within which CTRs must be filed, assists in improving the FIC’s operational capabilities and brings about increased efficiency in the cash transaction reporting system.
Amendments to the MLTFC Regulations on reporting on international funds transfers
Sections 31 and 56 of the FIC Act on the reporting of cross-border electronic funds transactions above the prescribed threshold of R19 999.99 came in effect on 1 February 2023. Section 31 introduces a new reporting stream – international funds transfer reports (IFTRs). It requires accountable institutions that are authorised to conduct transactions to transfer funds electronically into and out of South Africa, to report prescribed information in respect of cross-border electronic funds transactions above the prescribed threshold of R19 999.99. Section 56 makes it a criminal offence to not report international electronic funds transfers exceeding R19 999.99.
The FIC was established in 2002 as South Africa’s financial intelligence unit following the promulgation of the FIC Act in 2001. The regulatory body is the only entity authorised to receive transaction and other related data from financial and non-financial institutions.
The FIC interprets and analyses this information to develop financial intelligence. The resulting financial intelligence reports are requested by or, where necessary, referred to the competent authorities including law enforcement and prosecutorial authorities for them to use in their investigations, prosecutions, and applications for forfeiture of criminal assets.
The FIC does not itself conduct investigations nor does it prosecute matters in a court of law.
The FIC is a statutory body that operates outside the public service, but within the public administration, as envisaged in section 195 of the Constitution. It is registered as a Schedule 3A national public entity in terms of the Public Finance Management Act, 1999 (Act 1 of 1999) (PFMA). The Director of the FIC, who is also the Accounting Authority, reports directly to the Minister of Finance (National Treasury) and to Parliament.
The FIC is made up of six divisions:
The FIC collaborates with a broad spectrum of public and private sector stakeholders to enhance the fight against financial crime. This approach enables the FIC to speedily obtain and/or share quality information with its partners against crime. The FIC assists other financial intelligence units on the continent, providing mentorship and support. Through this support, the FIC ensures that especially the eastern and southern African region has strong networks in place to assist in disrupting illicit flows of money, share quality information and expedite the pursuit of financial crime.
The FIC presently has memoranda of understanding with 100 with financial intelligence units in other countries. These agreements facilitate the sharing of information through a network across the globe. Through these partnerships the FIC significantly contributes to South Africa’s intelligence, investigation and criminal justice value chain.
In the domestic environment, the FIC co-operates with various government departments and entities with which it is mandated to share information, in terms of section 40 of the FIC Act. These mandated institutions include government investigating authorities, intelligence services, investigative division in an organ of state, and any other entity or authority stipulated. Non-mandated institutions are those which may request information from the FIC but, are not under legal obligation to receive it. Mandated departments and entities are listed below.
The FIC leads initiatives based on public-public collaboration and public-private partnerships, geared to forge beneficial relationships between multi-disciplinary role players and optimising the use of financial intelligence. The collaborations and partnerships foster timeous sharing of financial and other information to expedite the prevention, detection, investigation and resolution of financial crimes. The aim of these initiatives is to improve safeguarding of the financial system through the effective use of financial intelligence produced by the FIC.
The Fusion Centre is a public-public collaboration bringing together law enforcement, intelligence, and criminal justice investigative bodies.
Started in 2020, the Fusion Centre has collaborated with members of government’s justice, security and intelligence community to expeditiously tackle corruption, fraud and other financial crimes related to misappropriation of funds set aside by government to alleviate social and economic hardship of citizens impacted by the COVID-19 pandemic.
The operational hub of the Fusion Centre includes the National Prosecuting Authority and its Asset Forfeiture Unit, the South African Police Service’s Crime Intelligence, Directorate for Priority Crime Investigation and Detective Service, Special Investigating Unit, South African Revenue Service, State Security Agency as well as the National Intelligence Coordinating Committee. Fusion Centre members operate within their own legislative framework and parameters, focusing their expertise, skills, and experience into a single hub.
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The task team was established to formalise a partnership between the FIC, money remitters, and authorised dealers with limited authority, to address financial crime, based on the principal of information sharing.
The membership of the group has grown from an initial four at the beginning of 2021, doubling to the current eight members. During monthly task team meetings STR reporting and corridor behaviours i.e. transaction patterns, culture, legislation and other aspects unique to country ‘corridors’, and new trends are discussed. A sub working group identifies, sanctions and removes unlicensed cross-border money or value transfer services from the market.
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With the support of National Treasury, the FIC initiated the public-private financial information sharing partnership, the South African Anti-Money Laundering Integrated Task Force (SAMLIT) in December 2019. The partnership between the banking sector and regulatory authorities has helped augment understanding of the transaction environment in criminal activity.
Participants include the Prudential Authority and the Financial Surveillance department of the South African Reserve Bank, domestic and foreign banks registered in South Africa, The Banking Association South Africa and the South African Banking Risk Information Centre.
The public-private partnership has contributed to investigations, arrests, prosecutions, forfeitures, and convictions of persons involved in serious money laundering and predicate offences. SAMLIT identifies behaviours and activities associated with different types of crimes through the establishment of expert working groups (EWGs). Tactical operations group (TOGs) assist in gathering and supplying information timeously to law enforcement and prosecutorial authorities via the Fusion Centre.
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The FIC is a member of the Intergovernmental Fintech Working Group (IFWG), which aims to develop a common understanding among regulators and policymakers of developments in financial technologies.
The IFWG was established in 2016 to understand the growing role of financial technology (fintech) and innovation in the South African financial sector and explore how regulators can more proactively assess emerging risks and opportunities in the market.
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South Africa is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), a regional body of FATF which aims to support countries in the region to implement the global AML, CFT and PF standards.
The FIC is a member of the Egmont Group of Financial Intelligence Units (Egmont Group), which is made up of fellow financial intelligence units from across the globe. The primary aim of the Egmont Group is to facilitate co-operation, sharing of financial intelligence information and capacity building among its members. The FIC contributes to strengthening this aspect in the southern African region through its work with ESAAMLG.
South Africa is a member of the Financial Action Task Force (FATF), which sets international standards and policy on anti-money laundering and for combating the financing of terrorism and proliferation financing (AML, CFT and CPF). The FIC supports government’s delegation to FATF.
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