RE5 Summary Slides - 2024 PDF

RE EXAM BUDDY 2024 RE5 TRAINING Compiled by Hassan Dalvie  TOPIC 1: FAIS ACT FAIS stands for Financial Advisory and Intermediary Services Act. FAIS Act regulates furnishing of financial services to clients in relation to financial product. Goal of the Act – client pr...

RE EXAM BUDDY 2024 RE5 TRAINING Compiled by Hassan Dalvie  TOPIC 1: FAIS ACT FAIS stands for Financial Advisory and Intermediary Services Act. FAIS Act regulates furnishing of financial services to clients in relation to financial product. Goal of the Act – client protection, maintain trust, maintain systemic stability. Act was enacted in Nov 2002 and effective 30 Sept 2004. Financial service FAIS ACT Financial product Client  FINANCIAL SERVICE - REFERS TO ADVICE &/OR INTERMEDIARY SERVICE Can only be rendered by persons licensed as, or represent, a licensed FSP Advice Intermediary service Recommend ; guide ; propose. Based FSP is middleman in selling/servicing. on opinion and info changes depending on financial circumstances. Based on fact, action, and service There is automated and non- performed on instruction from client. automated advice. Divided into scripted execution of sales Guidance related to a financial and other intermediary services. product, investment, variation of a Does NOT include bank taking premium financial product etc. on behalf of product supplier in its Not Advice: Describing a financial function as a bank. product ; answering admin questions ; presenting info on specific financial product without recommendation. Financial service can be rendered face-to-face or via direct marketing in the following ways: Telephonically , internet, media insert, direct mail, electronically.  Financial Product Client Must be sold/marketed in SA. Must be specific person/group of In which country/currency product is people. made is irrelevant. Excludes the general public. Promise made to client to pay in future. Includes beneficiaries/successor in title. Includes: Investments, medical schemes, crypto assets, insurance, friendly society benefits, pension fund benefits, bank deposits, funeral policy, long term and short-term insurance, bank deposit etc. Does NOT include credit products such as bank overdrafts, loans etc.  LICENSE CATEGORIES OF FINANCIAL SERVICE Definition: Refers to the types of services that can be rendered Category I (Ordinary FSP) – Renders ordinary financial service in that they can only act on client instruction. Can distinguish between advice and intermediary service. Category II (Discretionary FSP) – Renders intermediary service of discretionary nature (can decide on client’s behalf) regarding choice of financial product without implementing any bulking. Category IIA (Hedge Fund FSP) - Renders intermediary service of discretionary nature regarding choice of hedge fund. Category III (Administrative FSP) – Renders intermediary service iro financial product on client instruction and through bulking method. Category IV (Assistance Business FSP) – Performs the admin on assistance policies and includes person who is binder holder.  LICENSE SUBCATEGORIES OF FINANCIAL SERVICE Definition: Specifies the product in which the FSP is authorized to render financial services Subcategories regulated under Category I and not Category II/IIA 1. Long term insurance subcategory A 2. Short term insurance personal lines 3. Short term insurance personal lines A-1 4. Short term insurance commercial lines 5. Health service benefits 6. Friendly society benefits  TIERS OF PRODUCTS Product categories are divided into Tier 1 and Tier 2 products Tier 1 Products Tier 2 Products Also known as complicated Also known as uncomplicated products. products. Representative is exempt from some Representative is required to meet competency requirements (COB, RE 5, all of the competency requirements and CPD) to offer financial service for these Includes the following products: products. 1. Short term personal lines A-1 2. Long term ins sub cat B1A & B2A 3. Long term ins sub cat A 4. Friendly society benefits 5. Long and short term deposits  BUSINESS CLASSES For the purposes of class of business training and continuous professional development, financial products are also categorized according to 9 classes of business. 1. Short term insurance personal lines – Policy holder is natural person 2. Short term insurance commercial lines – Business insurance 3. Long term insurance – Risk event = life event 4. Pension fund benefits – Employer group retirement schemes 5. Short and long term deposits – Return linked to repo rate 6. Structured deposits – Return linked to investment or other indicator 7. Investments – Market related investments (securities and instruments) 8. Forex investments – Investment linked to currency risk 9. Health Service Benefits – Medical Aid/Hospital Plan  FINANCIAL SECTOR CONDUCT AUTHORITY (FSCA) FSCA also known as the Authority. Responsible for overseeing the conduct regulation of the financial services industry. FAIS division of FSCA is responsible for the regulation of FSPs and its functions include: 1. Registration of FSPs that meet the F&P requirements. 2. Supervising FSPs. 3. Ensuring compliance of all regulated officers (reps, KIs, and compliance officer) with the FAIS Act. 4. Taking enforcement action against FSPs/regulated officers not compliant with FAIS Act.  TOPIC 2: DUTIES & POWERS OF THE FAIS OMBUD Definition of FAIS complaint: When a client suffers a loss due to an action performed by the FSP. What caused the loss? - If FSP then matter referred to the FAIS Ombud. - If product supplier then referred to Sectorial Ombud. FSP has 3 weeks from date of complaint, to acknowledge to the client that the complaint was received.  CONDITIONS OF A COMPLAINT 1. Complaint referred to FSP first & not resolved within 6 weeks. 2. Complaint falls within the ambit of the FAIS Act and FAIS Ombud rules. 3. The act by the FSP occurred when Ombud rules were in force (i.e after 2004). 4. Loss suffered must NOT be > R800K : 2 exceptions – 1. Complainant forgoes loss over R 800K ; 2. The respondent agrees in writing. 5. Complainant is the client and the respondent is the FSP. If respondent has not resolved complaint within 6 weeks then respondent must inform complainant that complaint may be referred to the FAIS Ombud. Complainant then has 6 months after final response from respondent to submit complaint to the FAIS Ombud.  FAIS OMBUD MAY DISMISS COMPLAINT WITHOUT REFERRAL IF: 1. Complaint does not have reasonable prospect of success. 2. Respondent made fair offer still open to acceptance by complainant. 3. Matter was previously considered by FAIS Ombud. 4. Essential subject of complaint has been decided in court. 5. Subject of complaint pending in court proceedings. 6. Nature of complaint is such that FAIS Ombud can’t assist.  DETERMINATIONS BY FAIS OMBUD 1. If mediation fails – Ombud must make ruling. 2. Complainant may be awarded for compensation for loss. 3. Ombud may issue a directive to FSP. 4. Determination must be in writing – Commissioner and parties. 5. If no appeal – copy must be sent to clerk of court. 6. The respondent and/or complainant can apply to the Ombud for leave to appeal within 1 month of date of determination  CASE FEES, COSTS, & INTEREST 1. Case fee up to R 1000 is payable by respondent (non-refundable). 2. Payment of case fee may be enforced as final determination. 3. Ombud may grant costs against any party in favour of the other or the Ombud. 4. Determination = Compensation for loss + costs + interest. 5. Max monetary award = R 800k + interest from date of loss + cost awards.  TOPIC 3: RIGHTS OF THE FSCA Right 1: Declare an FSP undesirable FSCA may deem FSP practice undesirable if practice is not considered being in the best interest of the client. Can’t make immediate declaration. Must follow process. Notice of intention of declaration – Government Gazette with 21 days to respond (written) by interested parties. Where declaration issued to protect public – FSCA can publish on official website. Business practice deemed undesirable if: 1. Harms relations btwn FSPs 2. Harms relations btwn FSPs and clients. 3. Harms relations btwn FSPs and the public. 4. Client is unreasonably prejudiced 5. Client has been deceived. 6. Client is unfairly affected.  Right 1: Declare an FSP undesirable (continue) If FSP does not stop undesirable practice: 1. Max fine to FSP; 2. FSCA can issue directive ; 3. FSCA can summon FSP to enforcement committee ; 4. FSCA can impose unlimited penalties, cost orders, compensation orders ito Protection of Funds Act. FSP has 60 days from date of issue of directive to rectify/reinstate. Right 2: Business Rescue Defined as proceedings to rescue/rehabilitate financially distressed business. The Financial Services Laws General Amendment Act stipulates how business rescue should be applied to FSPs. FSCA may make application under the Companies Act iro affected FSP if in the best interest of clients/industry.  Right 3 : Application by FSCA for sequestration/liquidation of FSP After site visit, FSCA may apply to court for sequestration (natural person) or liquidation (juristic person) of FSP even if FSP is solvent. Court considers sequestration/liquidation is reasonable and necessary to protect clients/industry. Right 4 : On site visits FSCA may conduct on-site visits under the Financial Institutions Protection of Funds Act or instruct inspector to conduct inspection. After on-site visit is completed, FSCA may direct FSP to take steps to refrain from performing act, to terminate/remedy any failures.  TOPIC 4: LICENSING REQUIREMENTS OF FSP Application for Authorisation by FSP Application takes place through FSCA. FSCA may impose restrictions or additional conditions on FSP license. Commissioner issues license if F&P requirements are met. Fit & Proper requirements of FSP 1. Honesty, Integrity, & good standing of members, owners, directors etc. 2. Financial soundness : A>L (Financial soundness ; liquidity calculation form). 3. Operational ability: Must have ability to perform services effectively. If fit & proper requirements not met – First suspend license then subsequently withdraw license.  FINANCIAL SOUNDNESS REQUIREMENTS Category of FSP and General asset Additional asset Working capital Liquidity Requirement Juristic requirement requirement requirement Representative Cat I Assets > liabilities N/A N/A N/A Does not hold funds Cat I & IV Assets > liabilities N/A Current assets > Liquid assets = 4 weeks Current liabilities of annual expenditure Cat II Assets > liabilities N/A Current assets > Liquid assets = 8 weeks Current liabilities of annual expenditure Cat IIA & III Assets > liabilities Assets > liabilities Current assets > Liquid assets = 13 by 3 Current liabilities weeks of annual million expenditure  Ongoing License Responsibilities Display of License Display license at all times FSP must display CERTIFIED COPY of license in all branches in reasonable Comply with all laws manner. Act in accordance with Reference that FSP has license must authorization be included in all communications. Record keeping License must be available to persons requesting proof of status. Submit financial statements Record Keeping Non Adherence: Records must be kept for minimum FSP fine up to R10m, and/or 5 years after termination of product. Imprisonment of 10 years Store & retrieve in 7 days Record of advice only required if transaction is entered into.  Accounting Arrangements FSP must bring accounting records up to date monthly. Statements must be submitted to FSCA within 4 months of FYE (CAT I FSP). Exempt from appointing auditor if: o Cat I FSP that does not hold client funds. o Cat I FSP authorized ito Long term insurance A and friendly society benefits. Enforcement Action Failure to submit compliance report Ongoing license requirements not Fail to comply with FAIS followed Act No longer F&P Conducting Suspend then business with Fine: Lied on application subsequently No KI unauthorized FSPs R10m , or FSP Did not pay levy Failure to maintain withdraw records 10 yr prison Did not comply with Failure to stop license directive undesirable activity Did not comply with immediately condition/restriction  FSCA MUST publish following: FSCA MAY publish following: Suspension of FSP license. Debarment of representative. Lifting of suspension of FSP license. Lapsing of license. Withdrawal of FSP license. Lapsing of License Means deregistration of FSP Lapsed license cannot be reinstated Medical Schemes Act accreditation also lapses when FSP license lapses. If broker accreditation is withdrawn the FSP license is suspended.  Reasons for lapsing Commissioner must be informed of FSP is finally (not provisionally) lapsing by: liquidated/dissolved. Licensee (eg. company/cc) FSP is dormant. Key Individual FSP voluntarily & finally surrenders Person in control of affairs of license. licensee (eg. Beneficiary, executor If sole trader, if the owner: of estate). - Becomes permanently incapable of carrying on. - Finally sequestrated/dies Admin penalty for late submission of return, info, or doc to FSCA as required by FAIS: 1. FSP liable for fine of R1 000 per day late 2. Plus interest  Difference between suspension/withdrawal and lapsing of license Suspension/withdrawal of license Lapsing of license Initiated by FSCA Initiated by FSP FSCA may allow reinstatement No provisions for reinstatement Can reapply but may not be After lapsing, can reapply approved due to history immediately for new license Accreditation ito Council Accreditation ito Council Medical Scheme Act will also Medical Scheme Act will also be suspended/withdrawal if FSP be deemed to have lapsed if license is suspended/withdrawal FSP license lapsed. Levies payable to FSCA by CAT I FSP = base levy + additional amount (#reps + #KIs – #KIs that is also reps) Levies for Cat II FSP = base levy + additional amount (#reps + #KIs – #KIs that is also reps) + % of total value of investments managed Levies payable to FAIS Ombud = base levy + additional amount (#reps + #KIs – #KIs that is also reps)  TOPIC 5: FIT & PROPER REQUIREMENTS FOR REPRESENTATIVES Rep acts on behalf of FSP when FSP must ensure that rep adheres to the rendering financial service. following responsibilities: Therefore rep must be authorized by Rep must furnish clients with proof FSP to render financial service on its behalf. that he/she is authorized to be a rep. Rep must remain f&p. Rep may work under supervision if some of fit and proper requirements F&p deadlines must be met if working are not met. under supervision. FSP is liable for a penalty if it appoints Rep must comply with FAIS Act and a rep that does not meet the minimum other legislation. f&p requirements or requirements for providing financial service under supervision.  Representative Register Purpose: Provide record of all reps. Assists with calculation of FSCA levies payable. Enables Commissioner to maintain central register. Central register allows for public to look up names and license categories for which person is authorized. Register must be amended within 15 days of date of change. Register must be submitted to FSCA 15 days from date of amendment. If submitted late Fine up to R 1 000 per day per change + interest  FIT AND PROPER REQUIREMENTS FOR REPS 1. Honesty, Integrity, Good standing: 2. Operational Ability May not be appointed on evidence of Only applicable to juristic reps and NOT lack of H, I, GS. natural reps. If guilty, KI must consider : Seriousness, Must have the operation ability to Relevance, Passage of time. function effectively. Credit & traffic violations not included Juristic rep must have at least 1 KI responsible for managing and overseeing the financial services rendered by rep. 3. Financial Soundness Only applicable to juristic reps and NOT natural reps. FSP must ensure that natural rep is not 4. Competence (Main focus) declared insolvent, under liquidation, or 4.1 Experience under business rescue. 4.2 Qualification – 1) product specific training, 2) COB training, 3) Recognized qualification, 4) RE Exam. 5. Continuous Professional Development: 4.3 Transitional period  DATE OF FIRST APPOINTMENT (DOFA) DOFA: First time rep appointed for specific subcategory. Plus : DOFA never changes even if rep moves to another FSP - Product specific training Transitional Period - COB training 2004 2010 2018 If appointed as rep during this period, - Min qualification rep must have done - RE5 within 3 years of - Recognized DOFA: qualification - 30/60 credits - RE5, OR - Complete recognized qual. within 5 years of DOFA.  SUPERVISION TIMELINES 2010 onwards Class of business Recognized DOFA RE5 training Qualification - Rep under - Rep under - Rep under supervision supervision has 12 supervision has 2 has 6 years to months to years to complete complete from DOFA. complete from from DOFA. - Not applicable to reps DOFA. - Not applicable to rendering financial - Not applicable to execution of sales service in: execution of sales T1, & T2 products Long term sub cat A T1, & T2 products financial service. Friendly society benefits financial service. Execution of sales  Experience Conditions Experience involved active and ongoing gaining of knowledge ito FAIS. Experience obtained through active furnishing of financial service, even under supervision. Experience could have been gained in or outside SA. Experience could have been gained in intermittent periods. Experience gained prior to FAIS Act is acceptable. Experience gained > 5 years prior to application is unacceptable i.e experience expires after 5 consecutive years. Experience could have been gained simultaneously in multiple subcats, if proof can be submitted.  Reps performing execution of sales is exempt from COB training, recognized qualification, and RE requirements if they meet the following minimum reqs: Rep has grade 12 or NQF 4 or higher. Execution of sales is performed with a script approved by the KI. Execution of sales by telephone is recorded, stored, and retrievable. FSP has adequate and sufficient controls in place to monitor the rep. FSP must regularly review recordings and ensure no deviation from script. FSP must regularly review and monitor the adequacy and efficiency of controls. FSP must regularly review the script for appropriateness and compliance. The competency requirements related to product specific training does not apply to reps in Cat II, IIA, or III provided that: - Such reps have adequate knowledge of financial service, products. - Comply with f&p - Maintain their competence  Continuous Professional Development (CPD) Requirements CPD activities must be relevant to role and function. Must contribute to skill, knowledge, ethics of rep. CPD cycle starts 1 June till 31 May the following year (FSP submits within 15 days of expiry of CPD cycle). CPD activities EXCLUDE: 1)Activity performed towards qualification; 2)Product Specific Training Minimum CPD hours: No. of subclasses of No. of class of business No. of CPD hours per cycle business 1 1 6 hrs 2 or more 1 12 hrs 1 or more 2 or more 18 hrs CPD requirement not applicable to – Intermediary service ito Tier 1 product, Financial service ito Tier 2 product. If authorized for < 12 months : Pro rata CPD = No. of annual required hrs x (No. of months authorized/12) Continuous absence ( Maternity leave, long term illness, family care) : Pro rata CPD for cont. absence = No. of annual required hrs x ((12 – Months absent in cycle)/12)  TOPIC 6: SUPERVISION ARRANGEMENTS Supervision is required for reps who do not meet 1 or more of the competency requirements (i.e experience, qualification, RE, COB). Supervision refers to guidance by means of assessment, observation, instruction offered by the supervisor. Entry level requirements for working under supervision for Cat I &IV, Cat I, Cat II/IIA/III : Grade 12 or qualification equivalent to Grade 12. Supervision does NOT apply to Cat I reps appointed to perform execution of sales or to reps iro long term insurance A and/or friendly society benefits. Compliance Periods RE exam = 2 years Class of business training = 12 months Qualification = 6 years CPD = From the date on which the supervised rep completes the above 3 requirements or after 6 years, whichever occurs first.  Supervision Agreement FSP and supervised rep must enter into a written supervision agreement prior to rendering financial services under supervision. The supervision agreement must: Identify the supervisor and supervisee Set out the tasks which the supervised rep performs on behalf of FSP. Set out required knowledge, skills, expertise to competently complete tasks. Set out the training needs and program Duties of Supervisor Implement and ensure compliance with supervision agreement Mentor and coach supervised rep Must reassess learning activities and progress of supervised rep at regular intervals Must immediately inform the FSP should supervised rep’s actions lead to unfair client treatment Must document method, frequency, level of intensity of supervision and any changes thereto Records must be kept for: Dev & training, supervision activities, assessments, decisions to implement reduced level of supervision  Duties of FSP An FSP must ensure that a working relationship exists between the supervisor and supervised representative. An FSP must ensure the supervisor complies with the exemption conditions. An FSP must ensure the supervised representative is supervised when performing its functions. An FSP must at regular intervals review the appropriateness, effectiveness and adequacy of the supervision arrangements. An FSP must ensure that the supervised representative actively pursue the completion of COB training, RE exam and recognized qualification within the time limits. An FSP must reflect on its register of representatives, the central register and the competency register whether a representative is rendering financial services under supervision. An FSP must update the registers within 15 days after a representative ceases to render financial services under supervision.  Duties of a Representative A supervised representative must actively pursue the completion of the class of business training, regulatory examination and recognised qualification within the prescribed time limits. A supervised representative must at all times adhere to the provisions of the supervision agreement. A supervised representative must disclose to clients that it is rendering financial services under supervision. Intensity of Supervision An FSP must determine the supervision arrangements and the level of intensity of supervision that must apply to the supervised representative having regard to — The nature, scale and complexity of the financial services and products to be rendered by the supervised representative. The supervised representative's assessed level of competency. The risk to clients and the FSP. An FSP must at regular intervals review the appropriateness, effectiveness and adequacy of the supervision arrangements and the level of intensity of the supervision.  TOPIC 7: DEBARMENT PROCESS Enacted in 2002 as measure of self regulation of advice/intermediary service. Who may be debarred? Natural rep, Juristic rep, KI. Who has authority to debar? FSP and/or FSCA. Definition of Debarment Prohibits being involved in provision of financial services. Prohibits acting as a KI. Prohibits providing specified services to a financial institution i.e outsourcing. Grounds for Debarment No longer meet fit & proper requirements. Contravened or failed to comply with FAIS Act. Conspired with another person to contravene FAIS Act. Cannot debar for contractual or other grievance against rep/KI. Effective date of debarment: Takes effect from date on which it is served or on a later date. FSCA MAY publish debarment/revoked debarment.  Timing of Debarment FSP retains obligation to debar person if following requirements are met: Req 1: Reason for debarment must have occurred & become known to FSP while person was still a rep of the FSP. If not, must be referred to FSCA. Req 2: Debarment must commence no longer than 6 months from the date that the person ceased to be a rep of the FSP. Debarment Procedure Step 1: Give adequate notice to person Step 2: Consider representations Step 3: Take a decision Reporting debarment FSP must inform FSCA within 5 days of debarment by submitting Part 1 of debarment notification form. FSP must furnish FSCA with particulars of debarment within 15 days by submitting Part 2 of above form. MUST enter name of debarred rep onto database of debarred reps & remove from central rep register.  Duties of FSP after debarment Withdraw authority of debarred rep. Remove rep from rep register. Take immediate steps to ensure debarment does not prejudice interest of clients of debarred rep. FSP must inform clients of debarment. Ensure that unconcluded business of debarred rep is transferred to another authorized rep to attend to. Recourse measures of Rep Financial Services Tribunal (only for debarment decisions made after April 2018) Cases prior to April 2018 to approach competent court to assist with recourse. Role of FSCA during debarment process Does NOT review, approve, or confirm debarment. Only records that a debarment has occurred in the register for debarred reps. Ensures that on reappointment of debarred rep correct process is followed.  Debarred rep may be reappointed when: 1. 12 months have lapsed since debarment date. 2. All unconcluded business of rep has been concluded. 3. All legal proceedings/complaints fully resolved. 4. Debarred rep must fully comply with any decision issued. 5. All fit & proper requirements must be met.  TOPIC 8: KEY INDIVIDUAL (KI) RESPONSIBILITIES AND REQUIREMENTS A KI is a natural person that is responsible for the activities of the FSP relating to the rendering of financial services. The FSP may appoint any person as the KI except if the FSP is a sole proprietor or a company with only one director, i.e. the sole proprietor or the director must be the KI. The business continuity plan must identify another person that meets all the requirements that can be appointed, should the KI leave, or approval withdrawn. A KI’s authorization to act as KI will be withdrawn if the KI no longer meets the fit and proper requirements applicable to a KI for that specific category and/or class of business. Functions of a KI: A KI is responsible for the A KI must establish and maintain management or oversight of the the compliance function. rendering of a financial service by the reps of the FSP. Approval of KIs The FSP applies to the FSCA for approval of a KI. The application is submitted by completing the FSP 4D form and is accompanied by the certified ID or passport of the KI, as well as the CV and reference letters verifying the management and product experience of the KI. FSCA may impose restrictions or additional conditions on the FSP license, which may include specific conditions regarding the KI. Fit & Proper requirements of a KI: Honesty, integrity, and good standing Operational Ability A Key Individual may not be approved by A Key Individual must have and be able to FSCA if evidence indicates that the Key demonstrate to the FSCA that he or she has the Individual does not have honesty, integrity, required operational ability to effectively and adequately manage the FSP. and good standing Competence Continuous professional development (CPD) Experience KI, just like a rep, must ensure that the required CPD points are achieved during every CPD Qualification (recognised qualification & RE) cycle. Class of Business  TOPIC 11: FINANCIAL INTELLIGENCE CENTRE ACT (FICA) Purpose: To combat money laundering activities and the financing of terrorist and related activities. FICA pursue above by establishing the Financial Intelligence Centre (FIC). Furthermore, FICA bestows certain duties on accountable institutions to enable FIC to perform their statutory duties. Accountable institutions An attorney Foreign exchange dealer , A board of executors or a trust company or any person that invests, keeps in safe custody, controls or administers trust property Lender against the security of securities An estate agent Financial service providers excluding those registered to provide advice and or intermediary services in short term insurance or health service benefits. An authorised user of an exchange Persons who issue, sell or redeem travellers’ cheques, money orders or similar instruments Collective Investment Scheme managers Postbank A bank or mutual banks The Ithala Development Finance Corporation Limited Long-term insurer A Money remitter Gambling licensee  TOPIC 11: FINANCIAL INTELLIGENCE CENTRE ACT (FICA) New Accountable institutions recently added  All High-Value Goods Dealers who sell a single item for R100 000 or more, regardless of how payment is made (eg: cash, EFT, crypto etc)  Advocates that practise with a fidelity fund certificate, which are those advocates that can deal directly with clients from the public or from a justice centre  Trust and Company Service Providers (eg: being involved in the creation, operation and management of an external company, a foreign company, a close corporation, or a trust)  Credit Providers who are subject to the National Credit Act (NCA) and a person who carries on the business of providing credit in terms of any credit agreement outside of the NCA  Crypto Asset Service Providers  Co-operative banks  The South African Mint Company regarding the distribution of non-circulation coins in retail trade  Money or “Value” Transfer Providers (eg: a Clearing Systems Participant under the National Payment Systems Act; foreign exchange providers; non-bank mobile money service providers (e.g. airtime transfers etc.) The principal objective of the Financial Intelligence Centre is to assist in the— Identification of the proceeds of unlawful activities. Combating of money laundering activities and the financing of terrorist and related activities. Implementation of financial sanctions pursuant to resolutions adopted by the Security Council of the United Nations. FICA requires that an accountable institution must comply with the following main duties: Customer due diligence. Keeping of records. Providing the Financial Intelligence Centre access to information. Reporting certain transactions and suspicious activities (Applicable to reporting institutions as well). Measures to promote compliance by accountable institutions: Risk management plan and compliance program Governance of anti-money laundering and counter terrorist financing compliance Training regarding compliance  Administrative Sanctions The FIC or a supervisory body may impose an administrative sanction on any accountable institution, reporting institution or other person to whom FICA applies when satisfied on available facts and information that the institution or person: Has failed to comply with a provision of FICA or any order, determination or directive made in terms of FICA. Has failed to comply with a condition of a license, registration, approval or authorization issued or amended. Has failed to comply with a directive issued. Has failed to comply with a non-financial administrative sanction imposed in terms of this section. Penalties In terms of FICA, two maximum penalties can be rewarded for the different offences: Maximum penalty of R100 million or 15-years’ imprisonment can be awarded for the following: Destroying or tampering with records. Failure to give assistance to representative of the Financial Intelligence Center. Contravention of prohibitions relating to persons and entities identified by Security Council of United Nations. Failure to provide the Financial Intelligence Center with requested information. Maximum penalty of R10 million for natural persons and R50 million for legal persons, or 5- years’ imprisonment can be awarded for the following: Offences relating to inspection. Hindering or obstructing appeal board. Failure to attend when summoned. Failure to answer fully or truthfully. FICA does promote measures to combat money laundering but there are various other acts that criminalises money laundering and other activities and terrorist related activities, they are as follows: Prevention of Organised Crime Act (PoCA): This Act criminalises money laundering and defines specific offences in respect of racketeering and participation in criminal gang activities. It allows for civil forfeiture in respect of property involved in such illegal conduct as well as confiscation of any property obtained from the proceeds of unlawful activities. Prevention and Combating of Corrupt Activities Act (PreCCA): This Act creates a host of offences relating to corrupt activities and obliges persons in positions of authority to report such offences. Protection of Constitutional Democracy Against Terrorist and Related Activities (PoCDATARA): This Act broadened the scope of FICA to include the combating of financing terrorism and provides for measures to prevent and combat terrorist and related activities.