By the Financial Intelligence Centre (FIC)
Financial Services Providers (FSPs) are vulnerable to abuse for money laundering, terrorist financing, and proliferation financing (ML, TF and PF) and play an important role to protect the financial system by implementing the safeguards provided through the Financial Intelligence Centre Act (FIC Act).
Listed as accountable institutions under item 12 of Schedule 1 to the FIC Act, financial services providers (FSPs) are required to meet certain regulatory risk and compliance obligations. The first step towards meeting their FIC Act obligations is for FSPs to register with the Financial Intelligence Centre (FIC).
FIC Act risk and compliance obligations include identifying and reporting to the FIC, transactions which appear to be unusual or raise suspicions. Section 29 of the FIC Act stipulates that any person who conducts, oversees, manages or is employed by a business should report suspicious transactions and unusual activities to the FIC. This reporting type is known as a suspicious and unusual transaction report (STR).
The information contained in regulatory reports such as STRs is central to the FIC’s development of financial intelligence which law enforcement, prosecutorial authorities and other competent authorities use for their investigations, prosecutions, and applications for asset forfeiture.
Where an FSP suspects that a transaction or an activity involves ML, TF or PF, this must be reported as an STR to the FIC.
An FSP must file an STR when it becomes aware of certain facts or situations which give rise to a suspicion. This includes when it knows or suspects an activity or transaction:
- Is linked to proceeds of an unlawful activity or transaction
- May be relevant to the investigation of evasion or attempted evasion of a duty to pay tax
- Relates to the offence of financing of terrorist and related activities
- Is in contravention of the prohibition of providing finance to a sanctioned person under section 26B of the FIC Act
- Is structured with the intent to avoid being reported in terms of the FIC Act
- Is linked to the proceeds of unlawful activity
- Facilitates the transfer of proceeds of unlawful activities
- Has no apparent business or lawful purpose.
Furthermore, when a person files an STR they do not have to prove that the funds and or transaction in question are proceeds of crime or were linked to any crime. It is important to note that when filing an STR, there is no monetary threshold or limit applicable. Where there is suspicion or knowledge, the transaction or activity must be reported irrespective of the amount involved.
The STR must be filed to the FIC as soon as possible, but no later than 15 days from when the FSP becomes aware of the fact. Guidance note 4B provides details on how financial services providers should file STRs to the FIC.
All regulatory reports an only be submitted on the FIC’s registration and reporting platform which may be done by a compliance officer who is appointed by the FSP.
Larger institutions may appoint a money laundering reporting officer (MLRO) who can capture and file reports to the FIC. The compliance officer and the MRLO may not share their passwords as per Directive 2, although both functions share the obligation to monitor reports and submit STRs to the FIC.
For more information and guidance refer to the FIC website for various guidance notes and public compliance communications. Alternatively, contact the FIC’s compliance contact centre on +27 12 641 6000 or log an online compliance query on the website. | 
