Play your part in the fight against money laundering

report fraud FIC

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Play your part in the fight against money laundering, report suspicious and unusual transactions and activity.

If you own a business, manage a business, or are employed by a business, then you have an obligation to report suspicious and unusual transactions/activity to the Financial Intelligence Centre (FIC). This requirement to report suspicious and unusual transactions/activity stems from section 29 of Financial Intelligence Centre Act, 2001 (Act 38 of 2001) (FIC Act) and is referred to as a suspicious and unusual transaction report (STR).

You are best placed to assist in detecting whether your clients are abusing your business to attempt to launder money and/or finance terrorism. The FIC relies on information provided by reporters to identify the proceeds of crime and combat money laundering and terrorist financing.

So, one might wonder what includes suspicious and unusual transactions/ activity? You must file a STR when you know or suspect that the business has received or is about to receive the proceeds of crime or proceeds related to terrorist activity, also when you know or suspect a transaction is linked to:

  • the proceeds of unlawful activity;
  • facilitating the transfer of proceeds of unlawful activity;
  • has no apparent business or lawful purpose;
  • may be relevant to the investigation of an evasion or attempted evasion of a duty to pay tax evasion or attempted tax evasion;
  • an offence relating to the financing of terrorist and related activities;
  • the contravention of a prohibition under section 26B of the FIC Act (in terms of which you are prohibited from providing finance to sanctioned persons); and / or
  • any structuring of a transaction or activity which is conducted for the purpose of avoiding giving rise to a reporting duty under the FIC Act.

You don’t have to prove that the funds are linked to a crime, the STR can be based upon your mere suspicion. There is also no monetary limit or threshold that applies, where there is a suspicion or knowledge, the transaction or activity must be reported irrespective of the amount involved.

The following are some examples of factors that may raise your suspicion: the payment of commissions or fees that appear excessive in relation to those normally payable; transactions do not appear to be in keeping with normal industry practices; transactions seem to be unusually large or otherwise inconsistent with the client’s financial standing and where a client provides insufficient, vague or suspicious information concerning a transaction.

When a transaction hasn’t taken place, but the behaviour that a client is displaying makes you suspicious that your entity may be abused for money laundering and/or terrorist financing, you must report this as suspicious or unusual activity report (SAR).

Timeframe and manner of reporting

All STRs must be submitted within and no later than 15 days after you become aware and/or your suspicion is raised, regarding an activity or transaction. The report must be filed electronically on the FICs reporting system, goAML.

Effects of filing a report

Submitting a section 29 report does not prevent the business from continuing with the transaction, and the transaction may therefore continue. By submitting the STR, the business is simply alerting the FIC that it suspects an individual or entity may be abusing their business for purposes of money laundering.

The FIC Act also protects the identities of those involved in making a report to the FIC. A person involved in the making of a report cannot be forced to give evidence in criminal proceedings concerning such a report. However, such a person may choose to do so voluntarily. A person involved in the making of a report may not inform anyone, including the client or any other person associated with a reported transaction, of the contents of a suspicious transaction or activity report or even the fact that such a report has been made.

For more information on how to file reports refer to the FIC website (www.fic.gov.za) for the various FIC public compliance communications, guidance notes, reporting and registration user guides.

For further information please contact the FIC’s compliance contact centre on +27 12 641 6000 and select option 1. Alternatively log an online compliance query by clicking on: http://www.fic.gov.za/ContactUs/Pages/ComplianceQueries.aspx, or visit the FIC’s website and submit an online compliance query.

 

 

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First published on: ForbesAfrica