As we reach the ‘official’ change of seasons and the weather coaxes us outside again, we realise that it is definitely time to pull out the mountain bike or exercise mat and try to get that beach body back! We hope you enjoy the warmer weather.
It seems the various regulators have exhausted all their options and met the legislative requirements of the Financial Action Task Force (FATF) – now we need to see legal action taken to get South Africa off the grey list. Let’s hope there is the political will to make this happen since “state capture” features strongly in the list of issues.
That doesn’t mean there is nothing else happening though. Read on…
THE FINANCIAL SECTOR CONDUCT AUTHORITY (FSCA)
Warnings
The FSCA issued a warning to the public regarding Durban Forex Group.
Should the entity or persons be found to be providing financial services, the FSCA noted that it is not an authorised financial service provider (FSP).
In another case of FSP impersonation, the FSCA released a warning that FXMG MT4 Traders is representing to the public on various websites that it is associated with authorised FSP, FXMG South Africa (Pty) Ltd trading as FXMG ZA under FSP number 50202. The company does this by using the FSP number and logo of FXMG ZA. In addition, its website and social media pages bear close similarities to the layout of FXMG ZA’s website. FXMG ZA has confirmed that it has no affiliation, connection, relationship, or association with FXMG MT4 Traders.
Again, the FSCA points out that FXMG MT4 Traders is not authorised to conduct financial services business.
PI & FG exemption extension
The FSCA released Notice 60 of 2024 on 20 August.
The Notice grants a further extension to the exemption of FSPs licensed for only funeral benefits or friendly society benefits from having Professional Indemnity and Fidelity Guarantee covers in place and is valid until 31 August 2029.
FINANCIAL INTELLIGENCE CENTRE (FIC)
Business sectors preventing grey list exit
The FIC released a media statement with some basic statistics that it feels support its view that certain business sectors are wilfully hampering the work of the FIC and therefore leading to a delay in South Africa from exiting the FATF’s “grey list”.
In March 2023, the FIC issued Directive 6 calling upon legal practitioners, estate agents, trust service providers, company service providers, and casinos to complete and submit risk and compliance returns (RCRs) online, via the FIC website. The due date for these RCRs submissions was 31 May 2023.
According to the FIC the submission percentages are:
- Legal practitioners – 60%
- Estate agents – 66%
- Trust service providers – 74%
- Company service providers – 76%, and
- Casinos – 100%
Directive 7, which was also issued in March 2023, instructed dealers in precious stones, dealers in precious metals (including Krugerrand dealers), credit providers, and crypto asset service providers to submit RCRs by 31 July 2023, however there are still submissions outstanding.
The FIC is already issuing notices of intention to sanction, aimed at remediation and payment of fines as admission of non-compliance. Institutions that elect not to comply and pay the financial penalty, are processed through a formal adjudication process. In such instances, the resulting financial penalty may be increased due to the wilful non-compliance by such these institutions.
The platform for the completion and submission of outstanding RCRs remains active and accessible on the FIC website.
Guidance on beneficial ownership
The FIC published Public Compliance Communication 59 (PCC59) to provide guidance to Accountable Institutions on compliance with the beneficial ownership requirements of the FIC Act.
The PCC provides guidance on the beneficial ownership structures of legal persons, trusts, partnerships, and non-profit organisations, and then confirms what constitutes adequate, accurate, and up-to-date information.
The addenda include some infographics which will definitely make the implementation easier to understand for anyone tasked with the practical process of onboarding and verifying client information.
FIC Appeal Board ruling
The FIC Act Appeal Board issued a decision regarding an appeal of an administrative sanction imposed on Capital Point Properties (Pty) Ltd.
Capital Point Properties is an estate agent and as such falls under the definition of an “Accountable Institution”. The FIC imposed administrative sanctions on Capital Point Properties for failing to develop and implement a risk management and compliance programme timeously, as well as failing to scrutinise clients against the targeted financial sanctions list. In addition, Capital Point Properties failed to submit the risk and compliance return questionnaire as stipulated under Directive 6.
A total penalty of R266,000 was imposed and upheld in the appeal. The judgment emphasises that Accountable Institutions must take their FICA obligations seriously.
SOUTH AFRICAN RESERVE BANK (SARB)
Common monetary area countries move to regularise electronic funds transfers (EFTs)
At the end of July the SARB announced that low-value EFTs, debit, and credit payments made between Common Monetary Area (CMA) countries, namely Eswatini, Lesotho, Namibia, and South Africa, will be treated as cross-border transactions and subject to greater due diligence requirements from 30 September 2024.
Low-value retail payments were previously treated as domestic payments; however, the South African payment system must be regularised to enhance compliance with international standards and processes.
From 30 September, financial institutions will no longer be able to debit account holders in other CMA countries as if they were a domestic customer or policy holder. Debit orders collected from customers’ accounts within the CMA countries will have to be initiated from an account domiciled in the respective CMA country.
COUNCIL FOR MEDICAL SCHEMES (CMS)
Guidance on contribution increases and benefits changes for 2025
The CMS issued a circular to industry to guide the medical aids in their development of annual contribution increases and benefit changes for the 2025 benefit year.
It includes a brief review of the macro-economic environment faced by South African consumers and notes that, as much as the National Health Insurance Act has been signed into law, it has no effect as yet and that medical schemes should continue as normal.
The circular urges medical schemes to cap their 2025 tariff hikes at 4.4%, plus “reasonable” utilisation estimates. Once again positioning itself as a ‘champion of the people, the CMS notes that medical scheme contribution increases trend above inflation and this is not affordable for the average South African’. The reality that consumer price index does not reflect real inflation or that only about 16 percent of South Africans utilise medical aids has not been factored in to the CMS circular.
The document gives a general ‘feeling’ that it and the CMS are in the process of continuing to set up arguments in favour of the National Health Insurance Act despite its many flaws being made apparent and direct resistance from the suppliers of the services.
In short, our view is that consumers and brokers should not expect medical aid contributions to have a marginal increase, despite the pressure being put on medical aids to appear to be more accessible.
NATIONAL TREASURY
The Minister of Finance gazetted the 2024 levies on 23 August.
In general, the levies have increased by 6%.
FSPs can calculate their levies by multiplying the average number of Reps and Key Individuals (KIs) (between 1 September 2023 and 31 August 2024) by R551.20 and adding the base levy of R3,816.00. Please note that KIs who are also Reps are only counted once. The Rep and KI levy for Category I and IV FSPs only licensed for Long-term Insurance Subcategory A products and/or Friendly Society Benefits is R250.00.
The FAIS Ombud levy can be calculated by multiplying the average number of KIs and Reps by R690.00 and adding the base levy of R1,100.00.
The Financial Sector Tribunal levy is 2.5% of the FSCA levy. Entities regulated by both the PA and the FSCA will pay 2.5% of the sum of their PA and FSCA levies.
The levy on investments under management or administration increases to 0.0019711%.
The Ombud Council levy is 2.5% of the FSCA levy amount.
This year is the second (and last) year of the special levy which is 7.5% of the total of all the other amounts.
We have had no issues with the levy invoices issued last year, but would recommend financial institutions check them once received. Invoices will be issued during September and October.
A-PROOFED
There you are, diligently typing away on that report, contract, or compliance document, and you think to yourself, “I’ve got this. No need for a proofreader.” But wait. This is where I come in with my secret weapon: Track Changes. Why do we proofreaders insist on using this tool? Well, let’s just say it’s not because we like turning your document into a rainbow of red lines, strikethroughs, and comments. Although that is a delightful side effect.
Track Changes is the ultimate proofreader’s guide to transparency. It lets us jump in, correct those small but potentially deadly errors, and show you exactly where your document needed a little extra love. Think of it as my way of saying, “Hey, I fixed that overly-complicated sentence about the exclusion clauses in your insurance contract. You’re welcome.” Without Track Changes, it’d be like I rewrote your entire document in invisible ink. You’d be left wondering where things were adjusted and, more importantly, why they were changed. You’d miss out on the educational opportunity to learn from your mistakes. Where’s the fun in that?
For people in short-term insurance or financial services compliance, clarity and accuracy are non-negotiable. Let’s say your document originally reads, “The coverage applies unless the Insurer does not notify the Insured before the date of cancellation.” Your proofreader might turn that into, “The coverage applies unless the Insurer fails to notify the Insured before the cancellation date.” Boom! Clearer and more precise. It’s not just about correcting grammar or spelling, it’s about making sure your words do exactly what they’re supposed to do. And the fact that your proofreader returned the document to you with Track Changes activated means that you can see and understand the alteration, and take the lesson on board.
Using Track Changes is beneficial to you because it gives you full control. You get to review each edit and accept or reject changes. It’s an interactive and collaborative process that ensures the final document is both professional and exactly what you envisioned. Plus, it’s a lot more fun than trying to figure out what that cryptic scribble in the margin means.
So, if you’re ready to make sure your documents are professional and compliance-proof, drop me a line. I’m here to help with all your proofreading needs, and I promise to use Track Changes only when necessary.
Kim Hatchuel
kim@a-proofed.co.za
083 657 3377
