The FIC was established in terms of the Financial Intelligence Centre Act (2001, amended in 2008). The FIC Act works in concert with the Prevention of Organised Crime Act (1998), the Protection of Constitutional Democracy against Terrorist and Related Activities Act (2004), the South African Police Service Act (1995) and the National Strategic Intelligence Act (1994, as amended).
The FIC Act established the FIC and placed obligations on financial institutions and other businesses deemed vulnerable to money laundering. The Prevention of Organised Crime Act introduced the crime of money laundering onto the statute book and set the penalties associated with a conviction. The Protection of Constitutional Democracy against Terrorist and Related Activities Act introduced measures to address the financing of acts of terrorism.
The FIC Act established the FIC to:
- Identify the proceeds of unlawful activities
- Combat money laundering activities
- Combat the financing of terrorist and related activities
- Share information with law enforcement authorities, supervisory bodies, intelligence services, SARS and other local and international agencies
- Supervise and enforce compliance with the FIC Act
- Facilitate effective supervision and enforcement by supervisory bodies.
The FIC Act requires all businesses to report suspicious and unusual financial transactions.
It introduces a regulatory framework of compliance control measures requiring certain categories of business (defined as accountable institutions in terms of the FIC Act) to take steps regarding client identification, record-keeping, the appointment of compliance officers, the training of employees on how to comply and the filing of statutory reports.
It also requires that affected institutions and individuals register with the FIC and reflect their compliance structures.
The FIC Act assigns certain roles, responsibilities and powers to supervisory bodies to support the objectives of combating money laundering and preventing the financing of terrorist and related activities. The FIC has signed MoUs, which govern how supervisory bodies relate to the FIC and how supervisory bodies engage with the entities that report to them in terms of compliance with the requirements of the FIC Act.
The FIC’s primary activities, as set out in its founding legislation, are to:
- Process, analyse, interpret and retain information disclosed to and obtained by the FIC.
- Inform, advise, co-operate with and make its financial intelligence products available to investigating authorities, supervisory bodies, intelligence services and SARS to facilitate the country’s administration and enforcement of laws.
- Exchange information with similar bodies in other countries.
- Monitor and give guidance to accountable and reporting institutions, supervisory bodies and individuals regarding their compliance with the FIC Act.
- Supervise and enforce compliance with the FIC Act in affected institutions and by individuals not regulated or supervised by a supervisory body, or where the supervisory body is unable to act.
- Implement a registration system for all affected institutions and individuals.
- Annually review the implementation of the FIC Act and report on this to the Minister of Finance.
In executing its mandate, the FIC also seeks to:
- Contribute to the global framework against money laundering and the financing of terrorism.
- Develop policy options for the Minister of Finance based on an assessment of the available financial intelligence.
The FIC Act establishes the FIC as South Africa’s national centre for the development and dissemination of financial intelligence. The FIC was established to identify the proceeds of crime and combat money laundering and the financing of terrorism. In so doing, it fulfils its primary role to protect the integrity of South Africa’s financial system.
As a member of the FATF and other international bodies, and a signatory to a number of conventions (including the UN Convention against Transnational Organised Crime, the UN Convention against Corruption and the International Convention for the Suppression of the Financing of Terrorism), government has expressed its commitment to implementing international standards on combating money laundering and terror financing.
A FATF peer review exercise undertaken in 2009 indicated certain deficiencies in South Africa’s regulatory framework to combat money laundering and terrorist financing.
During this period, the FATF also initiated a review of international standards to combat money laundering and terrorist financing, which culminated in the adoption of a significantly enhanced set of standards in 2012.
To ensure that South Africa’s legal framework against money laundering and terror financing continues to meet international standards and best practice, the FIC and the National Treasury drafted amendments to the FIC Act. The FIC Act Amendment Bill seeks to:
- Introduce more transparency in the financial system
- Introduce more flexibility for financial institutions
- Improve the FIC’s capacity to analyse information.
Parliament unanimously adopted the Bill shortly after the end of the reporting period. It is envisaged that the new FIC Act will be implemented in a phased manner to give institutions time to adapt to the new requirements. See the information box on page 9 for an overview of the key amendments to the Act.
The FIC strives for a safer future for all South Africans in which the financial system has integrity and transparency to support economic growth and social development.
The FIC promotes increasing levels of compliance with the FIC Act in an efficient and cost-effective manner, enabling it to provide high-quality, timely financial intelligence for use in the fight against crime and the protection of national security.
The FIC seeks to achieve its mandate through the employment of highly capable staff members who are committed to the highest standards of excellence and professional service delivery in the fulfilment of their responsibilities.