Accountants as Accountable Institutions - What You Need to Know

Schedule 1 of the Financial Intelligence Centre Act, 38 of 2001 was substantially amended at the end of 2022, creating confusion about accountants' registration requirements. Below, we look at what is required when a practice is obliged to register as an accountable institution and what requirements apply after registration. During the recent Practice Management Conference 2024 of CIBA, the need to clarify accountants' roles in anti-money laundering and terrorist financing responsibilities became clear. This article provides answers to some of these important questions.

When Must Accountants Register with the FIC?

Accounting practices do not automatically fall within the definition of an ‘Accountable institution’. Schedule 1 of the FIC Act contains a list or ‘items’ that identifies the types of service providers that must be registered. These include:

• Item 2. Trust and Company Service Providers

• Item 3. Estate Agents Item

• Item 8. A person who carries on a life insurance business Item

• Item 9. A person who carries on the business of making available a gambling activity Item

• Item 10. A person who carries on the business of dealing in foreign exchange Item

• Item 11. Credit Providers

• Item 12. Financial Services Providers

• Item 20. High-Value Goods Dealers

• Item 22. Crypto Asset Service Providers.

Trust and Company Service Providers (Item 2 of Schedule 1)

When does an accounting practice fall under the category of trust and company service providers (TCSP)? Public Compliance Communication 6A (PCC 6A), issued on 21 August 2023, provides the answers to this question. The PCC defines TCSPs as follows:

Public Compliance Communication 6A (PCC 6A)

Accountants Who Do Not Have To Register With the FIC

While the definition of a TCSP is wide, leaving a lot of room for interpretation, PCC6A provides specifically excludes certain services from the definition. An accounting business who offer the following services do not have to register with the FIC:

• Bookkeeping and compilation of financial statements

• Filing tax returns

• Services that do not amount to making management decisions for the client or steer, impact or influence the client’s business operations.

Accounting Businesses That Must Register with the FIC

The exclusions listed above will exempt many accounting and tax service providers from the registration obligation. The services that will qualify an accounting practice to register with the FIC includes providing so called ‘secretarial services’.

An accounting business that offers company or trust registration services to clients, commonly known as ‘secretarial services’ will fall under TCSP and have to register with the FIC.

If an accounting business offers services as a “nominee,” it is still classified as a TCSP. A "nominee" is someone approved to hold securities or ownership interest in a business on behalf of others. When an accounting business acts as a nominee for a business, that business is considered their client. If the TCSP arranges for someone else to act as a nominee on their client’s behalf, then both the original client and the person acting as the nominee are considered clients of the TCSP. This also applies if the TCSP acts as a middleman in the arrangement.

How To Register as an Accountable Institution

To register FIC, all applications must be submitted electronically through the goAML online registration system. Here’s a step-by-step guide to register:

1. Visit the FIC’s website at www.fic.gov.za, then click on “REGISTER” tab in the top right corner to access the goAML platform.

2. Under the ‘REGISTER’ tab, select whether you want to register as person (for sole proprietors) or register as business.

3. Under Organisational Type you would typically select “Company Service Provider” OR “Trust Service Provider”. If your service offerings fall under more than one item, you will have to register under the other items separately.

4. Register the Compliance Officer using the ORG ID to register as a user for the entity’s profile. The compliance officer needs to be the first person to register.

Documents you need to submit:

• A certified copy of the compliance officer’s ID or passport

• A signed authorisation letter for appointing the compliance officer, following the template in Annexure 1, which should:

  • Be on the entity’s letterhead

  • Include the compliance officer's full name, ID/passport number, and occupation

  • Specify the compliance officer's role in the system

Once all information is completed and submitted electronically, the FIC will review the application. After submission, you’ll receive a registration reference number (SHREG number) for tracking any registration inquiries. The FIC will send an email to the compliance officer with approval or rejection details and confirm the entity’s ORG ID number.

If you do not receive a response from the FIC, you can log a query with them directly.

Queries relating to registration

Not sure if you are registered or got stuck in the process?

• LOG a compliance query

• DOWNLOAD the “goAML Registration Guideline for Accountable Institutions”

• DOWNLOAD the “goAML IFTR user guide”

• VIEW the step-by-step videos on how to register or update your details on goAML

• ACCESS all the user guides

• FILE a risk and compliance return (RCR)

  Contact the FIC Call centre at: +27 12 641 6000 OPTION 1

Reporting Obligations for Accountable Institutions

Accountable institutions must report on certain financial activities to the FIC as part of efforts to combat financial crimes like money laundering, terrorist financing, and tax evasion. Here’s an overview of these reporting requirements:

1. Risk and Compliance Returns (RCR):
   Under Directives 6 and 7 of 2023, accountable institutions must submit a “risk and compliance return,” which is an online report detailing their understanding of financial crime risks and the controls in place to manage them. Missing this report is a compliance breach and can result in penalties. Although this is a once off reporting obligation, however, the RCR must be kept up to date by the accountable institution.

   The following reports should be filed with the FIC as and when they become applicable:

2. Cash Threshold Reports (CTR):
   For any transaction involving cash over R49 999, a CTR must be filed within three days. This applies whether the cash is received or paid out by the institution. “Cash” here refers to physical currency, not electronic transfers. Failing to report a CTR can lead to heavy fines or even jail time. FIC Guidance Note 5C provides guidance on CTRs. FIC Guidance Note 5C provides guidance on CTRs.

3. Suspicious Transaction Reports (STR):
   Institutions must file an STR if they detect a suspicious transaction, regardless of the amount involved. Suspicion can arise if the transaction seems out of the ordinary, lacks a clear business purpose, or appears linked to criminal activity. STRs should be submitted within 15 days of noticing the suspicious activity. Please refer to Guidance Note 4B for further information on STRs.

4. Terrorist Property Reports (TPR):
   Institutions must report if they believe they hold or control any property that could be tied to terrorism. FIC Guidance Note 6A provides guidance on TPRs.

All reports are filed electronically through the FIC’s goAML system. These obligations ensure that accountable institutions play a role in identifying and preventing financial crimes.

The compliance obligations of accountable institutions in terms of the FIC Act are depicted below:

Source: Reference guide for all accountable institutions

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