FIC Fines Attorney Firm R7.7 Million for Non-Compliance
The Financial Intelligence Centre (FIC) Appeal Board upheld a R7.7 million financial penalty against Kunene Ramapala Incorporated, an attorney firm, for failing to comply with the Financial Intelligence Centre Act (FIC Act). This ruling sends a strong warning about the consequences of non-compliance with anti-money laundering regulations. The firm's violations, identified during a June 2023 inspection, included:
Failure to implement a Risk Management and Compliance Programme (RMCP): Resulting in a R3.8 million penalty.
Not scrutinizing clients against the Targeted Financial Sanctions (TFS) list: Leading to a R3.9 million fine.
Non-compliance with Directive 6: For not submitting a required Risk and Compliance Return (RCR) on time, incurring a R50,000 penalty.
Failure to update goAML system registration details and improper sharing of login credentials: Adding another R20,000 fine.
The firm admitted to these lapses but appealed the severity of the financial penalties, which the Appeal Board dismissed. The Board found the penalties appropriate, highlighting that the firm acted with gross negligence.
Key Takeaway for Accountants
Accounting practices - if they provide company and trust registration services amongst others, must register as an accountable institution with the FIC. Once registered, accountable institutions have to adhere to compliance obligations. Non-compliance not only carries financial penalties but also risks reputational damage and legal challenges.
You should priorise the understanding and fulfilling their FIC Act obligations. These include:
Registration and Reporting: Understand if you are required to register. If you are, ensure your firm's details are up to date on the FIC's systems and meet all reporting deadlines. Read more on what entities should register as accountable institutions in our article here.
Risk Management Programmes: Develop and maintain a robust RMCP tailored to your operations.
Client Scrutiny: Regularly check clients against the TFS list and other regulatory requirements.
Neglecting these duties can result in significant financial penalties and legal consequences. Stay informed and compliant to safeguard your practice and contribute to the integrity of South Africa’s financial system.
Read the FIC Media Release for more detail.
