The FSCA and other supervisory bodies use a variety of supervisory tools to monitor and supervise compliance with the FIC Act.

During the inspections, the institutions will be expected to prove compliance towards the new requirements. The emphasis of the inspections is to determine whether the institutions have proper systems, controls, processes and procedures in place to meet their regulatory duties.

Sanctions

The responsibility for compliance with the FIC Act rests with the Institutions and its board of directors or senior management.

Sanctioning non-compliance with the new requirements might have been delayed until 1 December 2018, however, the affected AI’S will be directed to apply and demonstrate improvements on the non-compliant areas.

Enforcement

Before imposing an administrative sanction, the FIC or supervisory body must give the person or institution affected by administrative action a hearing where that person can make a verbal input.

Once the administrative sanction has been imposed, the FIC or the supervisory body must notify the institution or person of the administrative sanction in writing should advise the recipient of the right to appeal against the decision.

What are the consequences of failure to comply?

Ignorance of the FIC Act is not an excuse and sanctions may be issued by the FIC or supervisory bodies regardless of the institution not knowing about their duties

The penalties for money laundering differ depending on the situation and the amount of funds involved. The more money involved, the harsher the punishment.

The penalties might be imprisonment, large fines, restitution, and community service.

Previously any financial penalty imposed had to be paid into the Criminal Assets Recovery Account (CARA) established by S63 of POCA.  Now any financial penalty has to be paid into the National Revenue Fund S45C(7)(a)

Administrative sanction has to be made public unless exceptional circumstances are present that would forbid such disclosure.

Publicised administrative sanctions can be found on FIC’s website: https://www.fic.gov.za/Compliance/Act%20Enforcement/Pages/Sanctions-by-FIC.aspx