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National Treasury has recently amended the Financial Intelligence Centre Act, with effect from 19 December 2022. The short of it is that suppliers of high-value goods (of R100,000 or above) who receive payment in any form, are now Accountable Institutions under the FICA legislation. This includes any type of business where a single item valued at R100 000 or more (whether new or second-hand) is sold to a customer.

There was unfortunately not much notice given, so if you’re hearing about this for the first time, and the new terms apply to you but you’re not yet be registered with FIC, you’ve missed the deadline and are now in contravention of the FIC Act. It’s therefore imperative that you continue to follow your current due diligence processes as per FICA, but register as an Accountable Institution as a priority.

The FIC team updated the JCSA in the last week of March 2023 and the below is to be urgently noted:

• All new Accountable Institutions must register ASAP.
• FIC will report back to FATF (Financial Action Task Force) regarding the registrations done and if the number of registrants are lacking, then FATF may take a very negative view, which could further delay South Africa being removed from the grey-list.
• FIC notes that, since so few entities have registered, they may follow up on the entities that should have registered, and  issue them with administrative sanctions as provided for in FICA , including financial penalties ranging between R5,000 and R3.6 million.
• There are going to be grey areas within the Act.  Do not wait for all the answers. It is your responsibility to assess whether you fall within the definition of a high value goods dealer and register as an AI.
•  The second-hand market is seen as a high-risk sector and these jewellers and second-hand goods dealers are advised to register with FIC.
• Krugerrand dealers were Reporting Institutions before the amendment and the FIC will automatically upgrade their registration on the system.

Does this apply to you? High-Value Goods Dealers (HVGDs) applicable to our industry are:

• Dealers in valuable precious metals coins, e.g. numismatic dealers
• Dealers in precious metals and dealers in precious stones, which include any persons who is a dealer in gold, any metal of the platinum group and the ores of such metals.
• Second-hand dealers in precious metals and stones, including metals such as gold, iron ore, platinum and copper.
• Diamond dealers, including any persons that hold a diamond dealer license.

Where the business has not yet sold a high-value goods item at the threshold of R100 000 or more but has a reasonable expectation that it will deal in such high-value goods, then that business must register as an Accountable Institution and not wait until it deals in an item at the prescribed threshold.

Although it’s understood from the Act that you will need to register for a transaction of a single item which is valued at R100k, the law is not clear around whether you will need to register if your day-to-day business is that of conducting single transactions of many items, totalling R100k. Rather follow the prudent approach and then deregister should FIC not wish to consider such transactions. The JCSA is hoping to obtain more clarity on this from FIC in due course.

Consider whether you currently, or have an expectation that you might, conduct transaction(s) of R100 000 or more. If you have marked an item at R100k, you are already an Accountable Institution in the eyes of FIC and if not registered, there will be repercussions. Therefore, assess your business and determine whether you want to play in this market. Although FIC registration is free, once registered you open yourself up to scrutiny. All components will come into play for a FIC inspection, such as training, appointing a compliance officer, etc. With this comes responsibility, costs and time to your company.

FIC has advised that should a purchaser not want to provide you with their personal information (ID and source of funds) for cash payments, then the sale needs to be cancelled. This sounds preposterous as no one wants to turn away a sale. They have advised that the response to ‘source of funds’ can be a job description, for instance ‘CEO’, ‘Business Owner’, or even ‘Salary’.

One important point to note is that you should not tell the person with whom you are transacting that you will be reporting their transaction. Once the transaction is complete, report it on goAML which is the online FIC platform.

Various categories of Accountable Institutions
There are some businesses that will not qualify as a High Value Goods Dealers (HVGD) because of the threshold of R100k but could fall into the Credit Provider category. This means that you could offer payment terms for goods sold, e.g. 3 months to pay for the item, with internal financing and interest charged over a period of time. In this instance, you would need to register on the FIC website as a Credit Provider.   Should you qualify as both a HVGD and a Credit Provider, you will have to register twice, once under each category.

Support services such as accountants, auditors and attorneys involved in your business must also register with FIC under their applicable categories.

Companies who have registered do not have to report all transactions, assuming that these are low-risk transactions. Therefore, if asked by FIC, you should be able to provide them with the due diligence conducted on these companies and it is for you to satisfy FIC why they are low-risk.  The FIC does not prescribe the format of the documents that would be needed for customer due diligence (CDD). Ultimately what would matter is that the customer is identified and verified. Therefore, besides an Identity Document, this would be determined by your institution.

Guidance Note 7  discusses customer due diligence and risk in further detail. Larger organisations need more comprehensive CDD on-boarding documents.

SUMMARY:
Please note that the FIC website still refers to Reporting Institutions and the fact that the threshold for cash reporting is R 24 999.99.  As per the amendments, Reporting Institutions fall away and the cash threshold has been raised to R 49 999.99.

If you are an Item 20 High Value Goods Dealer (HVGD), you are required by law to register with the FIC as an Accountable Institution in terms of Schedule 1. As an Accountable Institution you are required to:

• Submit regulatory reports to the FIC including:

• • Cash threshold reports (CTR): must be filed on cash received or issued if the amount exceeds R 49 999.99.
  • Suspicious and unusual transaction reports (STR): must be filed on transactions that are unusual or suspicious in terms of money laundering and terrorist financing activities.
  • Terrorist property reports (TPR): must be filed if you know that you possess or control the property of a natural person or entity linked to terrorist and related activities.
• Implement a risk-based approach to customer due diligence.
• Develop a risk management and compliance programme (RMCP). No generic programmes will be accepted by FIC.
• Keep records of client information, transactional information and regulatory reports filed with the FIC.
• Appoint a compliance officer to assist management in discharging their obligations in terms of the FIC Act.
• Train employees on the FIC Act and the Accountable Institution’s RMCP on an ongoing basis.

Guidelines to register:
Both registration and reporting are done on the FIC’s goAML online system which is accessed via the FIC’s website on www.fic.gov.za (you’ll find the Register button in the right hand corner of the website).Before you begin the online registration process, make sure you have the following items ready:

• A scanned certified copy of the identity document of the user who will be doing the registration online;
• A scanned copy of a letter from your organisation which grants the user the authorisation to register the organisation. Include the full names, ID/Passport no., role in organisation and the authorised role in terms of FICA, e.g. Compliance Officer or Money Laundering Reporting Officer
• The organisation’s group e-mail address, e.g. info@abcjewellers.co.za (i.e. not an e-mail address for a particular individual). There is a place for this in the registration but you can register multiple branches or common shareholders separately but use slightly different email addresses, e.g. info1@abcjewellers.co.za and info2@abcjewellers.co.za

Useful links:
The FIC has published step-by-step videos on how to register or update your details on the FIC’s registration and reporting system.

• Section 1: Introduction (Applicable to all Accountable Institutions): https://www.youtube.com/watch?v=558MMHjCTCs
• Section 2: This is not applicable to new registrations
• Section 3: Accountable Institutions that need to register for the first time: https://www.youtube.com/watch?v=sHBJk2clCe8

Additional Information:

• FIC Act regulatory obligations:
• https://www.fic.gov.za/Documents/FIC%20Act%20Booklet%20202012.pdf

Please note that all queries relating to goAML should be directed as follows:

• Log a query via the FIC website (Compliance Queries): https://www.fic.gov.za/ContactUs/Pages/ComplianceQueries.aspx
• Or contact them via the Call Centre at +27 12 641 6000 (option 1)

FICA Training:
This is a requirement of the Act and is ongoing for Compliance Officers (CO’s) and/or Reporting Officers (RO’s).  One CO is required and as many RO’s as the company identifies as necessary. No training = non-compliance. The Jewellery Council has negotiated special rates for an online e-learning portal which provides fundamental knowledge of the initial and the ongoing compliance requirements in relation to Act. This training will arm the CO’s and RO’s with the knowledge they need to comply going forward. The cost of the training is R4 300 + VAT (R4 94)  per delegate. Discounts for 5 delegates and more will be offered. Please contact lornal@jewellery.org.za for more info or to book.