FIC Act Compliance Quiz

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Questions and Answers

What is the maximum administrative sanction for a natural person failing to keep records as per Section 47?

R100,000,000

R5,000,000

R10,000,000 (correct)

R50,000

Which section imposes penalties for non-compliance related to record-keeping?

Section 10

Section 22

Section 47 (correct)

Section 24

Which organization can receive the transactional data reported by businesses as per the FIC Act?

Department of Trade and Industry

Central Bank of South Africa

Department of Justice

South African Revenue Service (correct)

What is the maximum penalty for a legal person for failure to keep records according to Section 47?

R50,000,000 Signup and view all the answers

Who has the obligation to report certain transactions to the FIC as per the FIC Act?

Any person employed by a business Signup and view all the answers

Which aspect is NOT included in a good regulatory report?

The person making the report Signup and view all the answers

What is the maximum penalty for a natural person under Section 50 for failing to comply with reporting requirements?

Up to R10,000,000 Signup and view all the answers

What is the minimum cash transaction amount that triggers a duty to report under the current regulations?

R49,999.99 Signup and view all the answers

What is the penalty for a natural person who fails to report cash transactions as required?

Up to R10,000,000 Signup and view all the answers

Which penalty is associated with legal persons under Section 50 for non-compliance?

Up to R50,000,000 Signup and view all the answers

How long can an individual be imprisoned for under Section 50 for non-compliance?

Up to 15 years Signup and view all the answers

What is the maximum fine for a legal person failing to report cash transactions?

R50,000,000 Signup and view all the answers

What is the main purpose of collecting the 'how' aspect in a regulatory report?

To describe the transaction completion Signup and view all the answers

What is the prescribed time frame to report a cash transaction that exceeds the reporting limit?

Within 3 days Signup and view all the answers

Which of the following is NOT a requirement when reporting to the FIC?

Confirming the client’s identity Signup and view all the answers

Which platform must be used for submitting Cash Threshold Reports (CTRs)?

GoAML platform Signup and view all the answers

In the context of reporting obligations, what does the 'why' component primarily address?

The rationale for the suspicion Signup and view all the answers

What amounts, in aggregated cash transactions, must be reported within a 24-hour period?

R24,999.99 Signup and view all the answers

What legal tender types are included in the definition of cash for reporting purposes?

Coins and paper money Signup and view all the answers

What type of institutions are primarily accountable for compliance with the regulatory reporting requirements?

Reporting institutions such as banks Signup and view all the answers

Which of the following statements is true regarding the reportable cash transaction amount?

All cash transactions above R24,999.99 within a 24-hour period must be reported Signup and view all the answers

What must an accountable institution do if it holds property associated with terrorist and related activities?

Notify the Centre within 5 days of discovery. Signup and view all the answers

Which of the following statements is true regarding the penalties for non-compliance with reporting requirements?

Natural persons may face fines up to R10 million. Signup and view all the answers

Which entity's resolutions are recognized for sanctions lists in South Africa?

United Nations Security Council Signup and view all the answers

What happens if an accountable institution delays reporting beyond the 5-day period without approval from the Centre?

It can trigger an administrative sanction. Signup and view all the answers

What is the maximum fine for a legal person for failing to report property associated with terrorist activities?

R50 million Signup and view all the answers

Which of the following activities is NOT the responsibility of accountable institutions?

Freezing all accounts immediately upon suspicion. Signup and view all the answers

What does Section 51A specify regarding failures to report property associated with terrorism?

Both administrative and criminal sanctions may apply. Signup and view all the answers

What is the consequence for a natural person found guilty of failing to report in accordance with Section 51A?

A fine not exceeding R100 million. Signup and view all the answers

What legal document serves as the basis for sanctions directed at certain countries, individuals, or entities?

Chapter VII, Article 41 of the United Nations Charter Signup and view all the answers

Which of the following is a characteristic of targeted financial sanctions?

They prohibit dealings with assets of designated individuals Signup and view all the answers

In the context of using third parties for customer identification, what is a critical requirement an AI must fulfill?

Maintain a register of all third-party service providers Signup and view all the answers

Which recommendation from FATF relates specifically to the prohibition of financing terrorism?

FATF Recommendation 6 Signup and view all the answers

What is a necessary condition for an AI when considering adverse media news?

News must be verified before adjusting a client's risk-rating Signup and view all the answers

What protection applies under the context of targeted financial sanctions?

Procedural and human rights protections apply Signup and view all the answers

What should an AI do if it considers that a third party has possibly obtained personal information without consent?

Provide confirmation of compliance with the Protection of Personal Information Act Signup and view all the answers

Which statement is NOT true concerning the obligation of an AI regarding third-party data sources?

AI is completely exempt from any responsibility over third-party data breaches. Signup and view all the answers

What must be reported by a person when an electronic funds transfer exceeds a prescribed amount?

The amount exceeding the prescribed limit Signup and view all the answers

What type of report must be submitted when there is suspicion of terrorist financing related to an incomplete transaction?

Terrorist Financing Activity Report (TFAR) Signup and view all the answers

What is the maximum administrative sanction for a legal person failing to report electronic fund transfers under Section 31?

R50 000 000 Signup and view all the answers

Which type of transaction can be reported even if it has not been completed?

Abandoned transactions Signup and view all the answers

Which of the following penalties applies for failure to report electronic fund transfers?

Criminal sanctions with potential imprisonment Signup and view all the answers

What commitment is distributed in the reporting of suspicious acts by the FIC from 2015 to 2021?

Over R3.3 billion recovered Signup and view all the answers

What action must be taken regarding a transaction involving multiple parties when an inquiry has been made but not completed?

Submit a TFAR Signup and view all the answers

Which of the following is NOT a trigger for reporting under the FIC Act?

Completed transactions over a set limit Signup and view all the answers

Which of the following entities must implement a Risk Management Compliance Program (RMCP) as defined by the FIC Act?

A mutual bank as defined in the Mutual Banks Act Signup and view all the answers

What is a key requirement for an accountable institution's RMCP?

It must be appropriate to the size and complexity of the institution Signup and view all the answers

Which business is classified as an accountable institution under the FIC Act?

A person who carries on a business of a money remitter Signup and view all the answers

What is the primary focus of a Risk Management Compliance Program (RMCP)?

Dealing with compliance related to financial crime responsibilities Signup and view all the answers

Who is responsible for the approval of persons under the Stock Exchanges Control Act?

The Registrar of Stock Exchanges Signup and view all the answers

Which statement best describes the content of an RMCP?

It captures the institution's entire approach to financial crime compliance Signup and view all the answers

What definition aligns with the term 'person' in the context of businesses mentioned in the content?

Any legal entity recognized, including partnerships and corporations Signup and view all the answers

Which organization is mentioned as being referred to in the Postal Services Act?

The Ithala Development Finance Corporation Limited Signup and view all the answers

What is the reporting threshold for cross-border transactions requiring an International Funds Report (IFTR)?

R5000 Signup and view all the answers

Which directive addresses the industry-specific application of requirements for processing electronic funds transfers?

Directive 1 of 2022 Signup and view all the answers

What is the main purpose of requiring International Funds Reports (IFTR)?

To enhance the ability to detect suspicious financial activity Signup and view all the answers

How soon must an IFTR be filed after a qualifying transaction has occurred?

Within 72 hours Signup and view all the answers

What is a key aspect outlined in the Draft Guidance Note 102A?

Guidance on accountable institutions' conduct regarding electronic funds transfers Signup and view all the answers

Which authorities jointly published the Draft Guidance Note 102A?

National Payment System Department and the South African Reserve Bank Signup and view all the answers

Why is ongoing training emphasized for Allied Institutions (AI) employees?

To ensure compliance with the FIC Act and reduce vulnerability to money laundering Signup and view all the answers

What is the recommended amount above which a report needs to be filed regarding International Funds Reports?

R10000 Signup and view all the answers

Study Notes

Penalties for Non-Compliance

Failure to keep records as per sections 22,23,24 of the FIC Act can result in an administrative sanction: R10 000 000 (Natural Person) or R50 000 000 (Legal Person).

Reporting Obligations

Entities have a duty to report certain transactions to the FIC.
The FIC uses this data to conduct financial intelligence analysis, and may share it with law enforcement agencies.
Key details for making a good regulatory report include the subject, activity, detection date, location, method, and reason for reporting.

Reporting to the FIC

Failing to report transactions as per section 29 can result in an administrative sanction: R10 000 000 (Natural Person) or R50 000 000 (Legal Person), or a criminal sanction of up to 15 years imprisonment and/or a R100 million fine.

Cash Threshold Reporting (CTRs)

Entities are required to report all cash transactions over R49 999.99.
Reporting also applies to aggregated amounts within 24 hours exceeding R24 999.99 for a single client.
The reportable cash transaction threshold is proposed to be raised from R24 999 to R49 999.
Reporting is conducted via the GoAML platform within 3 days of the transaction.
Cash for CTRs includes: coin and paper money, and traveller's cheques.
Failure to report cash transactions as per Section 51 can result in an administrative sanction: R10 000 000 (Natural Person) or R50 000 000 (Legal Person), or a criminal sanction of up to 15 years imprisonment and/or a R100 million fine.

Terrorist Property Reporting (TPRs)

Accountable institutions (AIs) must report property associated with terrorist and related activities, if held or controlled by the institution.
The reporting trigger is if the AI becomes aware that it holds a customer that is designated by the United Nations Security Council (UNSC).
Reporting deadline is within five (5) days of establishing that the AI has property associated with such activities.
The Centre may approve a report after the five-day deadline.
Only UN Security Council Resolutions are legally recognized sanctions lists in South Africa.
However, AIs may screen persons against other sanctions lists based on their risk appetite.

Penalties for non-compliance with TPRs

Administrative Sanctions: Up to R10 000 000 for natural persons and up to R50 000 000 for legal persons.
Criminal Sanctions: Imprisonment for a period not exceeding 15 years or a fine not exceeding R100 million.

Risk Management Compliance Program (RMCP)

In terms of section 42 of the FIC Act, AIs must develop, document, maintain and implement an anti-money laundering and counter-terrorist financing risk management and compliance program.
RMCP must be commensurate with the size and complexity of the AI and the nature of its business.
The program documents the approach adopted by the AI in dealing with financial crime obligations under the FIC Act.
AIs must screen for adverse news media and verify the information before adjusting their client's risk-rating.
All employees must be screened based on their role and the potential risk their role exposes the AI to money laundering, terrorist financing, and proliferation financing.
The Centre maintains an updated sanctions list on its website, which reflects identity particulars of persons and entities included in notices published by the Director.

Sanctions vs Targeted Financial Sanctions

Sanctions are preventive measures against threats to peace and security, including terrorism and proliferation of weapons of mass destruction.
Sanctions are directed at certain countries, individuals, or entities.
Sanctions do not require a finding of criminal guilt or civil entities.
The legal basis for sanctions is Chapter VII, Article 41, United Nations Charter.
Targeted financial sanctions are a ‘financial embargo’ on designated individuals and entities.
Targeted financial sanctions are captured under FATF Recommendation 6 (Terrorism) and FATF Recommendation 7 (Proliferation).
They prohibit dealing with assets of designated individuals or entities, including those owned, controlled by them, or on their behalf.
Targeted financial sanctions also prohibit making assets or financial services available to designated individuals or entities, or those owned or controlled by them, or acting on their behalf.
Procedural and human rights protection applies to targeted financial sanctions.

Using Third Parties

AIs must maintain a register of all third-party service providers.
AIs must ensure that third-party data sources comply with the Protection of Personal Information Act (POPIA).
AIs must ensure that third-party service providers are able to confirm that no breaches of POPIA have occurred.

Suspicious Transaction Report (SAR)

SARs are submitted when a suspicion does not relate to a transaction between two or more persons.
Inquiries about a transaction that has not been made yet can also be submitted.
A SAR can be submitted in respect of a suspicious transaction that has been abandoned or not completed.

Terrorist Financing Activity Report (TFAR)

A TFAR must be submitted when a suspicion relates to terrorist financing and does not involve a transaction between two or more parties.
TFARs must also be submitted for transactions where enquiries have been made but not completed.

Electronic Funds Transfer Reporting (EFT)

Section 31 of the FIC Act requires the reporting of all electronic fund transfers sending money exceeding a prescribed amount out of South Africa or receiving money exceeding a prescribed amount from outside South Africa, on behalf, or on the instruction of another person.
Reports must be made via the GoAML platform.

Penalties for non-compliance with EFT Reporting

Administrative Sanctions: Up to R10 000 000 for natural persons and up to R50 000 000 for legal persons.
Criminal Sanctions: Imprisonment for a period not exceeding 15 years or a fine not exceeding R100 million.

International Fund Reports (IFTR)

The commencement of section 31 of the FIC Act, which will allow for the reporting of IFTRs is pending and upcoming.
IFTRs report cross-border transactions above R5000 and must be filed within 72 hours.
The aim of IFTRs is to ensure that information relating to cross-border electronic funds transfers is reported to the Centre, enhancing the FIC's ability to analyze financial flows and detect possible suspicious or unusual activity.
The limit of IFTR reporting is R10,000.

Training

AIs must provide ongoing training to their employees to ensure compliance with the provisions of the FIC Act and the Risk Management and Compliance Program.
The focus of training is to ensure that employees are aware of their duties to help the AI avoid being abused for the facilitation of funds linked to money laundering, counter-financing of terrorism activities, and proliferation financing.

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Description

Test your knowledge on the penalties and reporting obligations outlined in the FIC Act. This quiz covers key aspects of compliance, including the consequences of non-reporting and the thresholds for cash transaction reporting. Understand your responsibilities as an entity under the FIC regulations.