Attorneys and estate agents have been fingered as being among the least likely to implement preventative measures to reduce money laundering and terrorist financing risks. This was the finding in the Financial Action Task Force’s (“FATF’s”) Mutual Evaluation Report. In addition, the report also noted that while larger banks file the best quality reports in terms of transaction reports, attorneys and estate agents generally file the worst.
The Financial Intelligence Centre Act, 2001 (“FICA”) requires accountable institutions to implement risk management and compliance programmes (“RMCPs”) to mitigate their risks. Failure to comply with the duties in respect of an RMCP is an offence and upon conviction, a person is liable to imprisonment for a period not exceeding 15 years or to a fine not exceeding ZAR100 000 000.
In terms of FICA, an RMCP must enable the accountable institution to:
- Identify, assess, monitor, mitigate, and manage the risk that the provision by the accountable institution of products or services may involve or facilitate money laundering activities or the financing of terrorist and related activities;
- provide for the manner in which the institution determines if a person is a prospective client in the process of establishing a business relationship or entering into a single transaction with the institution; or a client who has established a business relationship or entered into a single transaction;
- provide for the manner and processes by which the establishment and verification of the identity of persons is performed by the institution; and
- provide for the manner in which the institution determines whether future transactions that will be performed in the course of the business relationship are consistent with the institution’s knowledge of a prospective client.
For these reasons, it goes without saying that the RMCPs of accountable institutions, including financial services providers, collective investment scheme managers, attorneys and estate agents, are on the radar of the Financial Intelligence Centre (“FIC”). In terms of FICA, an accountable institution must, on request, make a copy of its RMCP available to the FIC.
