FIC Act amendments 2022 South Africa strengthen AML CFT regulations

• The FIC Act was amended in 2022 to address technical deficiencies identified by the Financial Action Task Force.
• The amendments expanded the mandate of the FIC, including producing forensic evidence and requesting information from state databases.
• Increased sectoral coverage includes new accountable institutions, enhancing AML/CFT/CPF supervision.
• Changes to definitions, such as beneficial owner, were also introduced.

The amendments authorise the FIC to request information from or access 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.

The Financial Intelligence Centre Act (FIC Act) underwent significant amendments in 2022 as part of the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act, 2022. The changes aimed to address technical deficiencies identified in the 2021 Mutual Evaluation Report of South Africa by the Financial Action Task Force. One key expansion was the mandate of the FIC, which now includes producing forensic evidence relating to financial transactions. Furthermore, the amendments authorized the FIC to request information from or access state databases and financial transaction records. The scope of coverage in Schedules 1, 2, and 3 was also increased to include new accountable institutions, enhancing anti-money laundering (AML), countering the financing of terrorism (CFT), and proliferation financing (CPF) supervision.

The FIC Act works in conjunction with other legislation, including the Prevention of Organised Crime Act (POCA) and the Protection of Constitutional Democracy Against Terrorist and Related Activities Act (POCDATARA). The Money Laundering and Terrorist Financing Control Regulations (MLTFCR), which prescribe reporting requirements for regulatory reports submitted to the FIC, were introduced in 2002. Since then, the FIC Act and MLTFCR have undergone several amendments to improve South Africa's AML/CFT/CPF framework. The recent amendments aim to address identified weaknesses and enhance compliance supervision of accountable institutions.

The expanded mandate of the FIC and increased sectoral coverage may impact lawyers' clients' compliance obligations. Lawyers should be aware that the FIC can now request information from state databases and access financial transaction records, which may require adjustments to their clients' anti-money laundering measures. The amendments also bring changes to definitions, such as beneficial owner, and include proliferation financing consistently. This development highlights the importance of staying up-to-date with regulatory requirements in South Africa's AML/CFT/CPF landscape.

Lawyers should watch for the expanded mandate of the Financial Intelligence Centre to request information from state databases and access financial transaction records, which may impact their clients' compliance obligations.

Source: Original reporting via The Financial Intelligence Centre