The Financial Intelligence Centre (FIC) recently hosted a compliance workshop for Crypto Asset Service Providers (CASPs) to address money laundering (ML) and terrorist financing (TF) risks. The workshop focused on compliance with the FIC Act, registration requirements, and ML/TF mitigation measures. CASPs have been accountable institutions under the FIC Act since December 2022, requiring registration with FIC before applying for other financial licenses.

Key statistics from the 2022/23 year

• Total institutions registered: 45,392

• Compliance inspections: 402 by FIC and 544 by supervisory bodies

• Regulatory reports received: over 5.3 million

• Value of criminal proceeds recovered: >R5.82 billion

FIC Sanction for non-compliance

The FIC emphasised engagement and highlighted the consequences of non-compliance include both administrative and criminal sanctions, which are enforced to maintain the integrity of the financial system and mitigate ML and TF risks.

Administrative Sanctions

1. Fines and Penalties: Institutions found to be non-compliant may face significant financial penalties. These can be issued for failing to register with the FIC, failure to report transactions, or failing to implement adequate controls to prevent ML and TF.

2. Remediation Requirements: Non-compliant entities may be required to undertake remediation actions, which can include implementing new policies, enhancing internal controls, or undertaking additional training for staff.

3. Increased Oversight: Institutions with a history of non-compliance may be subject to increased scrutiny and more frequent inspections by the FIC and supervisory bodies.

Criminal Sanctions

1. Prosecution: Failure to comply with certain provisions of the FIC Act, such as reporting suspicious transactions or complying with FIC directives, may lead to criminal prosecution. Convictions could result in fines or imprisonment for responsible individuals.

2. Reputational Damage: Criminal actions and enforcement against financial institutions for non-compliance can lead to severe reputational damage, affecting client trust and business operations.

3. License Revocation: Non-compliant CASPs or other financial institutions may risk losing their operating licenses, affecting their ability to provide financial services.

The FIC uses its enforcement and penalty regime as a deterrent to ensure that accountable institutions fulfill their obligations, which is crucial in combating financial crime and safeguarding the integrity of South Africa's financial system.