Another immediate 'deadline' for trust and company service providers (TCSPs)

MORE than two years ago, South Africa was found to have insufficiently addressed money laundering and terrorist financing, leading to its greylisting by the Financial Action Task Force (FATF).

- PHIA VAN DER SPUY

This greylisting has significant economic and reputational consequences for any country, prompting South Africa to set a deadline of January 2025 to fulfil all requirements for removal from the greylist.

Unfortunately, two action items remain unresolved following the latest plenary meetings in France in February 2025.

One item requires South Africa to demonstrate a sustained increase in the investigations and prosecutions of serious and complex money laundering, particularly those involving professional money laundering networks/enablers and third-party money laundering, aligned with its risk profile.

Additionally, South Africa must show a sustained increase in the effective identification, investigation, and prosecution of the full spectrum of terrorist financing activities, consistent with its risk profile. As a result of missing the deadline, we have now entered our first four-month rolling review cycle (from March to June 2025) with the FATF.

In a media statement, Treasury committed to addressing both outstanding action items by June 2025 to facilitate our exit from the greylist by October 2025. With the next reporting deadline approaching, it is unsurprising that we are experiencing increased compliance sanctions from the Financial Intelligence Centre (FIC) and the Financial Sector Conduct Authority (FSCA), aimed at demonstrating to the FATF that sufficient action is being taken against non-compliance.

This serves as a stern warning to all TCSPs to comply immediately with the aspects discussed below, at least before the end of May 2025, which will allow the FIC to prepare for the next FATF review in June 2025.

Guidance from fines already issued

Several Designated Non-Financial Businesses and Professions (DNFBPs), a relatively new category of persons and entities obligated to comply with the FIC Act, have already faced administrative sanctions for non-compliance.