South Africa’s money laundering watchdog names and shames

South Africa’s Financial Intelligence Centre (FIC) has slammed legal practitioners, estate agents, trust service providers, company service providers, and various other sectors for keeping the country on the grey list.

These sectors have yet to complete risk and compliance return (RCR) submissions as instructed by the FIC, which were due on 31 May 2023. The FIC warned that these sectors are at risk of administrative sanctions.

“Certain designated non-financial businesses and professions are continuing to ignore Financial Intelligence Centre directives aimed at helping South Africa exit the grey list of the Financial Action Task Force,” the FIC says.

The FIC says the RCR is a questionnaire designed to help businesses identify money laundering and terrorist financing risks.

It issued directive 6 in March 2023, calling on legal practitioners, estate agents, trust service providers, company service providers, and casinos to submit their RCRs.

While South Africa’s casinos have been fully compliant with the request, only 60% of legal practitioners, 66% of estate agents, 74% of trust service providers, and 76% of company service providers have submitted theirs.

It issued directive 7 at the same time, instructing precious stones and metal dealers, credit providers, and crypto asset service providers to submit their questionnaires. They had until 31 July 2023.

“RCR submissions are still outstanding from these sectors,” it said.

FIC executive manager for compliance and prevention Christopher Malan says businesses in these sectors appear to be willfully non-compliant.

“Institutions that have still not submitted their RCRs, are considered delinquent institutions and are automatically deemed to be at high risk of being used for money laundering and terrorist financing purposes,” he added.

He said non-compliant institutions will face targeted inspections or sanctions due to their non-compliance.

“Over and above this, these businesses are dismantling and disrupting South Africa’s efforts to exit the grey list and improve the country’s standing in the world economy,” said Malan.

“Remaining on the grey list can impact the lives of ordinary citizens, let alone a broad range of business and the economic future of the country as a whole.”

The FIC says it has already started issuing notices of intention to sanction, aimed at remediation and the issuing of fines for institutions that admit they are non-compliant.

Those who do not comply or pay their financial penalties will face a formal adjudication process.

“In such instances, the resulting financial penalty may be increased due to the willful non-compliance by these institutions,” the FIC said.

It noted that the platform for completing and submitting outstanding RCRs remains active and accessible.