June 2024 Legislative Update
It seems we are in for another round of “sports” holidays – Wimbledon tennis, UEFA European Football Championship, T20 Cricket World Cup, Tour de France cycling, and international rugby. If you’re not into sport at least you can keep up to date with the legislators with this Legislative Update. If you are into sport we recommend you take a few minutes to stay in touch with legislative events…
THE FINANCIAL SECTOR CONDUCT AUTHORITY (FSCA)
FSCA FICA report
The FSCA released a request for Accountable Institutions to complete a return on their activities and state of compliance with the Financial Intelligence Centre Act.
The return can be completed through the FSCA’s e-services website. Where we are the FAIS Compliance Officers appointed for financial service providers we will be able to directly assist with the completion of the report.
The report comprehensively covers the FIC Act and requires careful examination of the relevant policies and procedures during completion.
The reports are to be completed by 31 July 2024.
Warnings
The FSCA released a list of entities that are providing financial services unlawfully.
It is a sad state of affairs when there are so many cases that the regulator sees fit to notify the public through a list rather than individual cases.
FSCA debars Luan Krige
The FSCA confirmed the issuing of a penalty and debarment of Luan Krige in a press release on 6 June 2024.
Krige was debarred for 10 years and fined R715,000 for rendering unlicensed financial services in respect of forex trading.
FINANCIAL INTELLIGENCE CENTRE (FIC)
Risk Management and Compliance Programmes (RMCPs) comment deadline extended
The FIC has extended the deadline to comment on the proposed amendments to the RMCPs of Accountable Institutions to 5 July 2024.
The proposed changes are described in Public Compliance Communication 121A which needs to be read in conjunction with Guidance Note 7. The changes address issues around beneficial ownership and control of clients that are legal persons, trusts, and partnerships.
Comments can only be submitted via the following link.
Insights into money mule activity
The FIC published a report on the inherent money laundering risks related to money laundering activities and schemes in South Africa.
Money mules are individuals who are recruited to help launder the proceeds of crime or physically transport goods, merchandise, or money on behalf of a criminal. Persons being used as money mules may be knowingly or unknowingly complicit in the laundering of funds, thereby helping criminals to profit from illicit activities. Criminals use money mules to conceal the origin of their illicit funds and ultimately benefit from the proceeds of crime. By using the accounts of money mules to receive and transfer these proceeds, the mules help to create distance between the criminal and their ill-gotten gains.
The report used suspicious and unusual transaction and suspicious activity reports filed with the FIC between August 2016 and July 2023 to determine patterns and trend information.
The FIC noted during the analysis that Accountable Institutions did not provide sufficient information on suspected money mule activity in the regulatory reports they submitted to the regulator. Considering this, the FIC is expanding the list of indicators relating to money mules on the goAML system to enhance categorisation of money muling and related financial crimes.
The FIC’s analysis found extensive use of shell companies to host fraudulent funds, while most persons involved in money mule or illicit financial flow activities were South Africans. The majority of money mule activity identified in the reports and analysed by the FIC took place in the Gauteng and Western Cape provinces. Money mules often facilitate financial schemes, illicit financial flows, romance scams, job scams, and a myriad other scams allowing criminals to transfer illicit proceeds between banks, countries, currencies, or cryptocurrencies.
PRUDENTIAL AUTHORITY (PA)
Proposed Guidance Notice on liquidity risk management for insurers
The PA released a proposed Guidance Notice on liquidity risk management for insurers. Insurers are not obliged to adopt the proposed application methodology of the Guidance Notice that sets out practices and guidelines aimed at assisting insurers in complying with the requirements of FSI 6 (Liquidity Risk Management), GOI 3 (Risk Management and Internal Controls for Insurers), and GOI 3.1 (Own Risk Solvency Assessment for Insurers).
Comments can be submitted to PA-Standards@resbank.co.za for the attention of Pierre Mananga by 31 July 2024.
Minimum requirements for the recovery plans of market infrastructures
The FSCA and PA released a Draft Joint Standard on the minimum requirements for the recovery plans of market infrastructures.
The main objective of the Joint Standard is to propose minimum requirements to be complied with by market infrastructures in the formulation and implementation of their recovery plans. The Authorities are not prescriptive in respect of the recovery tools a market infrastructure may use.
Comments can be submitted to FSCA.RFDStandards@fsca.co.za or PA-Standards@resbank.co.za using the template by 18 July 2024.
Administrative sanctions posed on Bank of China Limited
The PA imposed administrative sanctions on Bank of China Limited as a result of its non-compliance with FICA as determined in a 2021 assessment.
The areas where Bank of China Limited failed to fulfil its obligations were:
- Failing to conduct client due diligence and enhanced due diligence;
- Failure to report suspicious and unusual transactions;
- Failure to respond to transaction alerts within 48 hours; and
- In general, failure to develop and implement a RMCP.
The total penalty is R30,5 million but half is conditionally suspended for 36 months.
Terrorist Financing Risk Assessment
The FIC released a report on terrorist financing on 24 June 2024.
The report serves as an ideal document to understand the current risks and methods terrorist groups use to fund their operations and should be read by all Money Laundering Control Officers (MLCOs) and Cash Reporting Officers (CROs).
It is then possible for MLCOs and CROs to ensure that their RMCPs adequately address this risk.
NATIONAL TREASURY (NT)
Demarcation regulations
National Treasury and the FSCA released the escalation of policy benefits notices on 30 May 2024. The current long-term benefits and short-term benefits take effect from 1 April 2024.
The benefits are increased by the 2023 CPI of 6%.
PA 2024 surveys and questionnaires
The PA released its (non-exhaustive) 2024 list of surveys and questionnaires for banks, insurers, and market infrastructures.
The second quarter will focus on negative rand reserves at the top five life insurers as well as operational risk maturity at all the entities. The third quarter has a risk aggregation and reporting questionnaire lined up for banks, a cyber risk questionnaire, and an IT risk questionnaire for all the entities. Lastly, leading into 2025 there will be a climate risk indicators data request for insurers and banks.
(Oh, what fun to be a compliance officer! Ed.)
COUNCIL FOR MEDICAL SCHEMES
Report dispelling misinformation around the National Health Insurance (NHI) released
An article that you may have been aware of relates to an independent review of the statements around the South African government’s motivations for the NHI Act.
The summary states that main three of the key assumptions driving the NHI are erroneous or not backed by any empirical proof.
OMBUDS
National Financial Ombud Scheme (NFOS) appoints lead ombud for banking
The NFOS has appointed Nerosha Maseti as Lead Ombud of the banking division.
Maseti was part of the team at the Banking Ombud for the past 18 years and no doubt brings considerable experience to the position.
A-PROOFED
Ah, Microsoft Word – the love/hate relationship of the modern office warrior. It’s the trusty steed we all have to ride, but it often feels like we’re trying to saddle a wild bronco. So, why does everyone seem to groan at the mere mention of Word?
Let’s start with the infamous Ribbon interface. Imagine needing a specific tool, but having to navigate through a maze of tabs and options. Need to insert a table, adjust margins, or find the track changes feature? It’s like trying to find a needle in a haystack – if the haystack was on fire and you only had minutes before your deadline.
And then there’s the whole formatting funhouse. Trying to get consistent bullet points or numbered lists can turn into an all-out battle, with Word often deciding it knows better than you. (It seldom does.)
Let’s not forget the mysterious case of the shifting fonts. You set your document to Calibri 11, but somehow, halfway through, it switches to Times New Roman 12. Why? Who knows? Word likes to keep you on your toes.
One of the most common irritations is dealing with section breaks. Want to have different headers or footers for different sections of your document? Adding or deleting section breaks can cause your entire document layout to go haywire, with headers and footers seemingly changing on a whim.
Then there’s the unpredictable behaviour of tables. Trying to insert, delete, or resize a table can feel like wrestling an octopus. Word’s tables often behave erratically, merging cells without warning or refusing to align properly. This can lead to hours of tweaking just to get everything to look right.
And what about Word’s insistence on grammar and style suggestions? While helpful at times, the grammar checker often flags stylistic choices as errors, turning your unique writing voice into a battleground. Trying to work around these constant corrections can be more annoying than useful, especially when Word insists that your perfectly-crafted sentence needs to be restructured.
But fear not, weary Word users! Here’s where I come in. As a self-proclaimed Word wizard, I’ve mastered Word’s deepest, darkest secrets. Whether you’re fighting formatting fiascos, wrestling with wayward images, or just trying to keep your sanity, I can help you tame this unruly beast. Let me transform your Word woes into Word wins and make your documents sparkle like magic.
So, next time Word has you pulling your hair out, remember: there’s a wizard for that! Let me make your work look good.
Kim Hatchuel
kim@a-proofed.co.za
083 657 3377
