The Financial Intelligence Centre (FIC) is pleading with law firms and estate agents who have not submitted their risk and compliance returns (RCRs) to do so in the coming days – or face penalties.
Last month, the FIC started a public campaign, especially targetting high-risk legal and estate agency professions, as part of its plan to get the country off the greylist.
The Financial Action Task Force (FATF) greylisted South Africa in early 2023 due to its shortcomings in tackling illicit financial flows.
The FIC has called on all legal and estate agency professionals, as well as other affected designated non-financial businesses and professions (DNFBPs) and accountable institutions, to submit any outstanding RCRs.
These RCRs have been outstanding since mid-2023, and the public drive was designed to ensure that all DNFBPs immediately submit them to the FIC.
Following the public appeal, there was a slight increase in RCR submissions across the board of DNBFBP sectors.
However, the percentage of estate agents and legal practitioners registered with the FIC who have submitted their RCRs stands at 55% and 60%, respectively. The FIC warned that “this is not good enough.”
“Practitioners in the legal profession and estate agent practitioners, are considered high-risk for money laundering and terrorist financing abuse,” said Christopher Malan, executive manager for compliance and prevention at the FIC.
“Through the completion and submission of RCRs, the identified sectors can show that they are aware of the risks their businesses face of being abused for money laundering and terrorist financing purposes.”
“More importantly, the submission of the outstanding RCRs enables the FIC to risk profile each submitting individual DNFBP accountable institution, to determine the higher risk entities for risk-sensitive supervisory inspection purposes.”
Malan warned that without the information obtained through the RCR, the FIC cannot develop a credible response when it presents its next FATF update report on Friday, 22 March 2024.
As part of South Africa’s plan to get off the grey list, the FIC must identify entities that are at risk of being used for money laundering, terrorist financing and proliferation financing purposes.
The FATF greylisting timeline for South Africa to meet this particular action item is May 2024.
Punishment
Failure to submit an RCR can lead to administrative action under section 62E of the FIC Act. The FIC has already issued 264 notices of intention to sanction delinquent institutions, with a particular focus on legal practitioners and estate agents.
The FIC warned that it will issue notices of intention to sanction delinquent institutions subject to Directive 7, which deals with credit providers, crypto asset service providers, and dealers in high-value goods, later in March 2024.
“While the FIC thanks all accountable institutions that have responded to the call for submission of their RCRs, there is still an urgent need for those that have not yet done so to submit their RCRs before 20 March 2024.”
