Page 95 - Profile's Unit Trusts & Collective Investments - March 2025

Legislation and Guidelines

Are you an “Accountable Institution”?
FICA lists a number of “accountable institutions”. One of them is “A person who carries on the
business of rendering investment advice or investment broking services, including a public accountant
as defined in the Public Accountants and Auditors Act 80 of 1991, who carries on such a business.”

FICA complements the Prevention of Organised Crime Act (POCA) which specifically criminalises
money laundering. POCA, however, does not place any KYC (Know Your Client) or reporting
obligations on banks or other entities which may be used by criminals in money laundering (ML) or
terrorist funding (TF) activities. These requirements were introduced under FICA.
The original FICA has been amended a few times to ensure South African money laundering
legislation remains in line with international best practice. Recent amendments have been aimed
at ensuring FICA is in line with recommendations of the Financial Action Task Force (FATF), an
initiative of the G&, based in Paris, and aimed at combatting money laundering, terrorist financing
and finance for weapons of mass destruction.
In 2023 the FATF put South Africa on its grey list, indicating that country's measures had some
deficiencies and increased monitoring was required.
In February 2025, the FATF found just two remaining items needed to be addressed before
South Africa could be removed from the grey list. These related to reputational damage to the
country, as its effectiveness in combatting financial crimes like corruption and money-laundering
as well as terror financing are deemed to be below international standards.

Accountable Institutions
FICA defines a broad range of entities involved in financial transactions as accountable institutions.
The list includes, amongst others, banks, real estate agents, investment managers (including collective
investment schemes), forex dealers, casinos, attorneys, long term insurers, and stockbrokers.
In December 2022 the range of accountable institutions was broadened to include more credit
providers, dealers in high-value goods (over R100 000), people who assist in setting up companies
local or foreign companies, people, including trustees, who assist in setting up trusts, the South
African Mint Company, crypto-asset service providers, informal money or value transfer providers
(hawaladars), and payment clearing service operators.
Motor vehicle dealers and dealers in Kruger Rands that were previously reporting institutions
only are now also accountable institutions.
Accountable institutions are required to report suspicious transactions and tax evasion to the
Financial Intelligence Centre (FIC) and their compliance is monitored by supervisory bodies,
whereas reporting institutions report directly to the FIC.
FICA places onerous duties and obligations on all accountable institutions. These include:
The establishment and verification of the identities of clients
Maintenance of detailed records about clients, business relationships and transactions
An obligation to make such records available to FIC
An obligation to inform FIC, on request, of the existence of a current or past mandate
An obligation to report suspicious transactions
FICA stipulates that any person who carries on a business, including a manager or employee, who
knows or suspects certain transactions may be of a suspicious or unusual nature, is obliged to report
this to the FIC. Even more burdensome is the obligation to report on a potential transaction even if
this comes to nothing (ie, where there is an enquiry with an accountable institution but no
transaction takes place). To complicate the relationship between service providers and clients,
there is also in the Act a prohibition against disclosure by the reporting person that a report to FIC
has been made.
Risk-Based Monitoring
As mentioned above, the FICA amendments promulgated in 2017 have shifted the process of
monitoring and reporting clients and transactions from a rules-based approach to risk-based approach.

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