The Financial Intelligence Centre Amendment Bill envisages the creation of a risk-based approach to AML/CTF compliance - how will this affect accountable institutions who fail to comply?
Throughout the development of anti-money laundering/counter-terrorist financing (AML/CTF) law dealing with organised crime and terrorist activities, non-compliance with AML/CTF law has mostly been regarded as a crime.
The Financial Intelligence Centre Amendment Bill, 2015 (Amendment Bill) takes an approach more in line with the Financial Action Task Force’s (FATF) recommendations, in that it not only changes the nature of the legal obligations, but also the manner in which the regulator oversees these obligations.The Amendment Bill proposes to change certain types of conduct, currently criminalised in FICA, to acts of non-compliance, which are punishablethrough administrative sanctions.
The Amendment Bill furthermore also introduces new types of administrative sanctions.
Administrative sanctions, as provided for in the Amendment Bill, may arise as a result of inefficient customer due diligence and associated record keeping procedures, as well as gaps in the AML/ CTF Risk Management and Compliance Programme.
Non-compliance with provisions, directives and regulations issued by the Financial Intelligence Centre relating to administrative sanctions now carries a maximum penalty of R1 000 000 instead of the R100 000 it used to carry. Financial penalties will furthermore now be paid into the National Revenue Fund, rather than into the Criminal Assets Recovery Account as was previously the case.
Criminal offences in the Amendment Bill are reserved specifically for traditional money-laundering activityor terrorist financing. The penalties for conviction of offences under sections 55, 62A, 62B, 62C or 62D remain the same, i.e. a maximum period of imprisonment of five years or a fine not exceeding R10 million (per contravention).
It thus appears that the intention of the provisions is to enhance South Africa’s regulatory framework in line with international law and best practise which, over the past decade has shown an increasing emphasis on the imposition and enforcement of administrative sanctions.
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