Financial Intelligence Centre - Updated notification to all Estate Agents operating in South Africa

Financial Intelligence Centre

Updated notification to all Estate Agents operating in South Africa

Cash threshold reporting obligation

The obligation on all accountable and reporting institutions to report cash transactions amounting to R25 000 or more, to the Financial Intelligence Centre (the Centre), came into effect on 01 December 2010.

Cash threshold reporting has been implemented in terms of section 28 of the Financial Intelligence Centre Act, No 38 of 2001 (the FIC Act), and forms part of the Centre's mandate to identify the proceeds of crime, to combat the financing of terrorist activities and to prevent criminal money being laundered into the south African economy.

Thus far, the number of cash threshold reports from estate agents has remained disappointingly low. Estate agents, like all reporting and accountable institutions, are encouraged to comply with its reporting obligations to avoid heavy penalties including imprisonment and fines of up to R100 million.

Registration with the Centre

Also as of 01 December 2010, it became compulsory for all accountable and reporting institutions, among them estate agents, to register with the Centre. all accountable and reporting institutions have until 1 March 2011 to register with the Centre.

The objective of registration is to ensure that the Centre is aware of the number of estate agents that fall within the ambit of the FIC Act as well as to provide the Centre with all the details it requires to fulfill its statutory mandate.

Having businesses accross the various industry sectors registered with the Centre will discourage illegal operators and ensure competition on a more equal footing. In terms of registration the Centre noted that few estate agents have registered with the Centre.

Not registering with the Centre, is an offence, and estate agents, along with all other industry sectors, stand to be penalised with imprisonment or fines of up to R10 million for non-registration.

New Powers for the Centre

The Financial Intelligence Centre Amendment Act, 2008, came into operation on 1 December 2010, effecting a number of amendments to the FIC Act.

The Director of the Centre, Mr Murray Michell says: "These amendments bring about a significant change to the legislative frame work of the Centre as it broadens our functions and those of supervisory bodies to ensure greater compliance. It also strengthens out ability to detect and to prevent illicit monies from being laundered through our financial system."

With these amendments, the Centre and supervisory bodies are afforded a number of administrative measures to ensure compliance and to deal proactively and reactively with failures to comply with the FIC Act.

These measures include:

• The ability to conduct inspections by supervisory bodies or the Centre
• The authority to impose administrative sanctions such as monetary penalties; and
• The establishment of an Appeal Board for those who wish to challenge decisions of the Centre or supervisory body. Members of the Appeal Board will be appointed by the Minister of Finance.

All estate agents who have previously acquired login credentials from the Centre before 1 December 2010 will be required to update and confirm their details, to comply with their registration obligation.

An updated guideline on registration and cash threshold reporting can be found on the Centre's website at www.fic.gov.za.

Enforcement of the FIC Act

The Centre will soon be embarking on a joint inspection process with the Estate Agency Affairs Board. During these inspections the Center's officials will be conducting reviews to ensure that estate agents are complying with the provisions of the FIC Act. Estate agents are therefore encouraged to ensure that they are fully compliant with the provisions of the FIC Act to avoid the criminal and administrative sanctions provided for by the FIC Act.

The FIC Act makes provisions for new penalties which include:

15 Years or R100 million

• Not identifying persons
• Not keeping records
• Destroying or tampering with records
• Not reporting suspicious or unusual transactions
• Not sending a report to FIC
• Misuse of information
• Conducting transactions to avoid reporting duties

5 Years or R10 million

• Failure to formulate and implement internal rules
• Failure to provide training / appointing a compliance officer
• Failure to register with Centre

It strengthens our ability to detect and to prevent illicit monies from being laundered through our financial system...

Feedback and Enquiries

Enquiries may be sent to the Centre by e-mail to [email protected].
You may also telephone the Center on +27 860 FIC FIC (342 342).
Kindly consult the Centre's website at www.fic.gov.za to keep abreast of further developments.

Financial Intelligence Centre
January 2011

Courtesy: Agent – The Official Publication of the Estate Agency Affairs Board

“Redressing the Past, Building the Future and Guiding the Real Estate Business towards Professionalism”