March 2025 was a busy month for the Financial Intelligence Centre ("FIC") as it rolled out several key updates aimed at strengthening the reporting obligations of accountable institutions. In addition to releasing draft Public Compliance Communication ("PCC") 118A, the FIC also published Directive 3A and PCC50A, following extensive public consultation under the Financial Intelligence Centre Act, 2001 ("FICA").
These updates are crucial for all accountable institutions and other persons required to file reports with the FIC - collectively referred to as "Reporters". Both Directive 3A and PCC 50A introduce new measures related to International Funds Transfer Reports ("IFTR"), outlining the procedures to follow if a reporting failure occurs or if defective reports are submitted.
Key Features of Directive 3A and PCC 50A
Directive 3A sets forth the necessary actions if a reporting failure is identified. It emphasises that Reporters must notify the FIC in writing immediately upon discovering a reporting failure. This proactive approach helps mitigate the loss of critical intelligence data. In addition, Reporters are expected to request an engagement with the FIC to discuss the relevant mitigation factors.
PCC 50A complements Directive 3A by expanding on strategies to reduce the risks of lost intelligence due to reporting failures. It offers guidance to mitigate the impact of defective reports, ensuring that the FIC continues to receive accurate and timely information.
Reporting Obligations Under FICA
The FIC relies on various types of reports filed in compliance with specific sections of FICA, including:
- Section 28: Cash threshold reporting
- Section 28A: Terrorist property reporting
- Section 29: Suspicious and unusual transaction reporting
- Section 31: International Funds Transfer Reports ("IFTRs")
These reports are essential for the FIC's efforts to combat financial crime, and accurate, timely submissions are critical to its success.
What Happens When a Reporting Failure Occurs?
In the event of a reporting failure, Directive 3A requires Reporters to act swiftly to mitigate any damage caused. This includes informing the FIC in writing as soon as the failure is identified and seeking an engagement to discuss the steps for remediation. However, it's important to note that taking steps to mitigate the consequences of a reporting failure does not equate to the FIC condoning the failure, nor does it absolve the Reporter from its ongoing reporting obligations.
By publishing these updates, the FIC is reinforcing its commitment to maintaining the integrity of financial intelligence and ensuring that all institutions under its purview continue to meet their compliance obligations. This move is part of the broader effort to enhance the fight against financial crime and protect the integrity of the financial system.
These revisions highlight the FIC's continuous efforts to improve its systems and ensure that all accountable institutions meet their obligations under FICA, fostering a more secure financial environment for everyone and hopefully assisting in having South Africa removed from the Financial Action Task Force's greylist.
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