fica Accountable Institution regulations

New FICA Accountable Institution Regulations [2024]

Financial regulations are often ebbing and flowing, changing and reverting. Because of this, staying ahead of the latest changes is not just a matter of compliance but a commitment to the integrity of the international financial system.

As the Acumen Group, we’re proactively addressing the recent amendments to the Financial Intelligence Centre Act (FICA) in South Africa.

This blog post aims to dissect the intricacies of the new FICA regulations, shedding light on the responsibilities of accountable institutions and their impact on clients.

Understanding FICA Accountable Institutions

At the core of the Financial Intelligence Centre Act (FICA) lies a critical framework designed to safeguard financial systems against the threats of money laundering, terrorist financing, and proliferation financing.

FICA identifies specific entities as “accountable institutions,” recognising their pivotal role in maintaining the integrity of financial transactions. As we, the Acumen Group, fall under this designation, it’s crucial to delve into the essence of FICA accountable institutions.

Designation of Accountable Institutions

FICA’s meticulous selection of accountable institutions reflects a strategic approach to encompass diverse sectors susceptible to financial crimes. Beyond conventional entities such as banks and insurers, FICA extends its scope to include professionals deeply entrenched in financial landscapes, such as accounting firms.

This inclusion recognises the intricate role that accounting firms play in the financial ecosystem. As custodians of financial information and advisors to businesses and individuals, accounting firms contribute significantly to the overall financial integrity of the system.

Stringent Requirements for Compliance

Once designated as accountable institutions, entities like us face a set of stringent requirements mandated by the FICA framework. These requirements are not mere bureaucratic hurdles; instead, they serve as a bulwark against illicit financial activities that could compromise the stability of the financial system.

These stringent requirements encompass various facets of financial operations, ensuring that accountable institutions adhere to high standards of transparency, due diligence, and compliance. The objective is clear – to establish an environment where financial transactions are conducted lawfully and transparently, mitigating the risk of financial crimes.

Our Role as FICA Accountable Institution

As an accounting firm, our inclusion in the category of accountable institutions underscores the importance of our role in maintaining financial integrity. We are not just service providers; we are guardians of financial transparency and compliance.

Our responsibilities under FICA go beyond routine accounting tasks. We are entrusted with the task of implementing robust risk management and compliance programs, conducting thorough client identification and verification, and scrutinising transactions for potential risks. You can read more about this below.

This comprehensive approach reflects the recognition that the accounting sector is a critical player in the fight against financial crimes.

A Brief Overview of the Regulatory Landscape

The genesis of the recent changes in South Africa’s FICA regulations can be traced back to 2019 when the country faced scrutiny from the Financial Action Task Force (FATF). The FATF identified areas of concern, including state capture, money laundering risks, and inadequate records. Consequently, South Africa found itself on the “Grey List” – a catalogue of jurisdictions under increased monitoring.

To address these deficiencies, South Africa committed to resolving strategic actions by January 2025, with the duration on the Grey List contingent on the speed of resolution. As the Acumen Group, we want to align ourselves with these commitments, acknowledge our role as an Accountable Institution, and embrace a proactive approach to compliance.

Key Responsibilities and Considerations

Understanding FICA accountable institutions is crucial for comprehending the regulatory obligations imposed on entities like ours. The new FICA regulations necessitate meticulous planning and execution to fulfil responsibilities and expedite South Africa’s removal from increased monitoring.

Our Commitment to FICA Compliance: A Proactive Stance for a Secure Financial Future

As the Acumen Group, we are committed to ensuring that our financial dealings align with the latest regulations, particularly the recent amendments to the Financial Intelligence Centre Act (FICA) in South Africa. We want to keep you informed about our proactive stance and the measures we are taking to ensure compliance.

As mentioned above, we recognise the importance of aligning ourselves with these commitments. To ensure compliance with the FIC Act, Amendments, and associated Regulations, we are implementing a robust Subjective Risk Management and Compliance Program.

This program includes:

Thorough Client Identification and Verification: We understand the significance of knowing our clients inside out. This involves a meticulous process to ensure accurate identification and verification.

Client Questionnaires: We are introducing client questionnaires to gather essential information. These are not pre-populated, ensuring that the details are current and accurate.

Determining Beneficial Ownership: Identifying beneficial ownership is a crucial step. If it’s unclear, we are committed to reporting the relationship to the Financial Intelligence Centre (FIC).

Scrutiny of Client Transactions: We are implementing measures to scrutinise client transactions, specifically focusing on Money Laundering and Terrorist Financing risks.

Our Timeline for Implementation

In line with our commitment, we plan to initiate the new FICA process from the 1st of March 2024. This proactive step not only showcases our dedication to compliance but also contributes to South Africa’s efforts to be removed from the Grey List.

Common Questions and Answers

As with any new regulations, we understand that there will be questions. We’ve highlighted a few popular ones below.

Who is responsible for enforcing FICA regulations?

FICA regulations are enforced by the Financial Intelligence Centre (FIC) in South Africa. The FIC acts as the regulatory body overseeing compliance with anti-money laundering and counter-terrorism financing measures.

Is Section 28 of FICA applicable to accountable institutions and reporting institutions?

Yes, Section 28 of FICA applies to accountable institutions and reporting institutions. It outlines the obligation to report certain transactions and activities to the FIC.

Who must comply with FICA?

Various entities, including banks, insurers, estate agents, and accounting firms, must comply with FICA. These are designated as accountable institutions under the legislation.

Why would FICA name some institutions to be accountable under its legislation?

FICA designates certain institutions accountable to ensure a comprehensive approach to combating financial crimes. By imposing obligations on a diverse range of entities, FICA aims to create a robust system to prevent money laundering, terrorist financing, and proliferation financing.

Do you have more questions that we’ve not covered? Feel free to contact us and we’d be happy to discuss any further questions you have.

Final Thoughts

As we embark on implementing the new FICA regulations, we want to underscore the importance of client collaboration. The commitment to expertise, coupled with a proactive approach to compliance, positions us as a responsible and reliable partner in navigating the challenges and opportunities in the financial landscape.

In conclusion, the new FICA regulations represent a legal requirement and an opportunity for accountable institutions to showcase their dedication to financial integrity and international cooperation. We believe that our proactive stance and commitment to excellence echo the broader industry’s collective responsibility to safeguard the financial system against illicit activities.