South Africa was grey listed by the Financial Action Force (FATF) on 24 February 2023. The FATF then developed an action plan which required South Africa to satisfactorily demonstrate its remediation of certain action items in order to exit the grey list. As part of the action plan, South Africa and more particularly, the FIC, must identify designated non-financial businesses and professions (DNFBPs) entities that are at high risk of being abused for money laundering, terrorist financing and proliferation financing purposes.
To assist with this identification, the FIC developed an RCR tool which, in terms of Directive 6 issued on 31 March 2023, placed the obligation to submit RCRs to the FIC by 31 May 2023. As per Directive 6, the obligation to submit RCRs was placed upon the following accountable institutions, as listed in Schedule 1 of the Financial Intelligence Centre Act, 2001 (Act 38 of 2001) (FIC Act): Item 1 – legal practitioners; item 2 – trust service providers and company service providers; item 3 – estate agents and item 9 – casinos and gambling institutions.
The obligation to submit the RCRs applies to all affected accountable institutions, including estate agents, mentioned in Directive 6, which were registered with the FIC, or which ought to have registered with the FIC on 31 March 2023, being the date of issue of Directive 6. This applies to all branches of head offices that have been issued with a FIC organisation identity (Org ID) number.
The RCR questionnaire is an important tool for entities to improve their understanding of their risks of being abused for money laundering, terrorist financing and proliferation financing purposes. The RCRs are also crucial to the FIC, as the designated supervisor for DNFBPs, to implement and keep up-to-date supervisory risk-assessment tools to identify higher risk DNFBPs as a basis for risk-based supervision.
To date, a disappointingly low number of entities in the estate agent sector have submitted their RCRs, notwithstanding extensive outreach and communication by the FIC.
The FIC has also found that some entities in the sector have relied on their head office to file their RCRs. The FIC advises that each head office and each of their branches, franchises and/or independent agencies, which has been issued with a FIC goAML Org ID (organisation identity) number, is required to complete their own risk and return.
At this stage, all entities in the estate agent sector who have failed to submit their outstanding RCRs, are non-compliant and deemed as high-risk, and may expect to receive an administrative sanction notice from the FIC.
The FIC has already commenced administrative sanctions against non-compliant entities, and will increase both the level of scrutiny through inspections and enforcement action, against delinquent entities.
Ultimately, non-compliance with the RCR obligations is viewed as being indicative of greater non-compliance with the FIC Act obligations, which may require the FIC to conduct more intrusive inspections on such offending entities.
The submission of all outstanding RCRs must be addressed urgently, as the FIC is required to report further to FATF on progress in this area within the next two months.
While the deadline for RCR submissions, 31 May 2023, has long passed, the requirement for submission of returns nonetheless remains in place and the platform for completion remains open.
The FIC acknowledges that some estate agent entities have successfully submitted their RCRs. However, the submission of all outstanding RCRs by delinquent estate agents must be addressed as a matter of urgency.
While the 31 May 2023 deadline for submission of RCRs has long passed, the requirement for submission of RCRs nonetheless remains in place and the platform for completion remains open. Kindly access this link complete and submit your RCR to the FIC, immediately.
For any queries please call the FIC’s compliance contact centre on 012 641 6000 or visit compliance@fic.gov.za and for further information, visit www.fic.gov.za.
We all need to overcome the impediment of the lack of returns so that we can progress and contribute meaningfully in reaching the national goal of exiting the FATF grey list.
SUPPORTING DOCUMENTATION
240205_fic-letter-30838-to-estate-agent-entities_submission-of-outstanding-rcr
240221-urgent-submission-of-rcrs
