From CompliNEWS | Financial Service Intelligence Watch

Key takeaways for South African firms regarding sanctions in light of FICA


The Financial Intelligence Centre Act (FICA) in South Africa, while primarily aimed at combating money laundering and terrorist financing, has significant implications for firms navigating the intricate realm of international sanctions. Here are the essential insights for South African firms from a sanctions perspective:

Understanding sanctions lists is paramount. Firms must familiarise themselves with both local and international sanctions lists, including those from the United Nations, the European Union, and other major entities. It’s vital to regularly check and update these lists to ensure no business is conducted with sanctioned entities or individuals.

Enhanced due diligence measures should be applied for transactions involving countries that are subject to sanctions or are considered high-risk for money laundering and terrorist financing. Regular risk assessments of doing business in countries or with entities that might be directly or indirectly linked to sanctioned activities are crucial. This includes understanding the nature of the client’s business and their connections.

Training and awareness are key. Staff should be well-informed not only about FICA regulations but also about the implications of international sanctions. They should be adept at identifying potential red flags related to sanctioned entities or countries.

Firms have a duty to report any transactions or business relationships that might be linked to sanctioned entities or activities to the Financial Intelligence Centre, even if they aren’t explicitly tied to money laundering or terrorist financing.

It’s essential to scrutinise third-party relationships, including suppliers, partners, and customers, to ensure no inadvertent business dealings with sanctioned entities occur. Investing in advanced screening tools that can automatically flag potential sanctioned entities or suspicious transactions can aid in real-time monitoring and compliance.

The dynamic nature of international sanctions means firms must stay abreast of changes to sanctions lists and the geopolitical events that might lead to new sanctions. Regular engagement with legal and compliance teams can help firms understand the implications of sanctions on current and future business activities, including the nuances of ‘secondary sanctions’ that can impact firms even if they aren’t directly dealing with a sanctioned entity.

Lastly, as with other aspects of FICA, firms are expected to cooperate fully with supervisory bodies and the Financial Intelligence Centre when it comes to sanctions-related inquiries. Proactive measures, continuous training, and staying updated are the cornerstones of compliance and risk mitigation in this realm.