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Financial Intelligence Centre Act (FICA) policy

Last updated: 8 October 2024

Introduction

Money laundering and terrorist financing are global problems due to changes in world markets.

Increased international trade and organized crime have made it easier for criminals to convert illegal money into legal funds.

Money laundering and terrorism financing harm financial institutions and political stability.

To fight these crimes, the Financial Action Task Force (FATF) was created in 1989. South Africa joined FATF in 2003 and passed laws like the Financial Intelligence Centre Act (FICA) to combat these issues.

FICA introduces rules to fight money laundering and terrorism financing in South Africa and established the Financial Intelligence Centre (FIC) to enforce these rules. Our organisation is classified as one that might be targeted by criminals, so we commit to fully complying with FICA.

Fynbos are a representative of Life Current, a licensed financial service provider that is an accountable institution in terms of FICA therefore it is imperative that these policies are followed.

Definitions

  • Beneficial Owner: A natural person who owns or controls a legal entity.
  • Business Relationship: A regular transaction relationship between a client and our organisation.
  • Cash: Legal tender, including coins, and paper money.
  • Client: A person who enters a transaction or business relationship with our organisation.
  • Client Representative: A person authorised to act on behalf of a client.
  • Effective Control: The ability to influence or make key decisions for a legal entity.
  • Enhanced Client Due Diligence: Extra steps to verify the identity of clients.
  • Legal Person: Any entity (except a trust, partnership, or sole proprietor) entering into a transaction with our organisation.
  • Money Laundering: Activities that conceal the origins of illegal proceeds.
  • Noncompliance: Failing to follow FICA regulations or our compliance program.
  • Organ of State: Government departments or institutions exercising public power.
  • Property Associated with Terrorism: Assets used to support terrorism.
  • Source of Funds: Origin of the money used in a transaction.
  • Client Due Diligence: Steps to verify clients.
  • Suspicious Activity Report: A report of suspicious activities not involving a transaction.
  • Suspicious Transaction Report: A report of suspicious transactions.
  • Terrorist Financing Report: A report of activities or transactions funding terrorism.
  • Trust: A legal arrangement defined by the Trust Property Control Act 57 of 1988.
  • Terrorist Property Report: A report of property linked to terrorism.

Policy Purpose

This policy ensures our commitment to an effective Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) program. It helps us identify, assess, manage, and monitor risks related to money laundering and terrorism financing.

Key aspects include:

  • Verifying client identities and their representatives.
  • Monitoring transactions to ensure consistency with client profiles.
  • Examining unusual transactions.
  • Reporting suspicious activities to the FIC.
  • Applying enhanced due diligence for high-risk relationships.
  • Keeping records of all due diligence and transactions.
  • Adherence with this policy both within the organisation and by representatives.

Policy Statement

We commit to:

  • Protecting the integrity of our organisation and the financial service provider we represent.
  • Using a risk-based approach for client transactions.
  • Educating employees and representatives on identifying high-risk relationships.
  • Implementing robust due diligence procedures.
  • Reporting suspicious and large transactions to the FIC.
  • Maintaining accurate records.
  • Preventing reputational and financial damage from noncompliance.

Risk and Compliance Standards

We limit the nature of clients we will do business with, and the products and services we offer, in order to reduce our risks.

Principals

Our FICA risk and compliance policies and processes adhere to the following principals:

  • We only provide products and services to clients that are natural persons.
  • We only provide products and services to clients that are South African residents with a valid South African ID number.
  • We will only engage with representatives of clients where the client is under the age of 18 and the representative is the client’s parent or legal guardian.
  • We do not transact in cash under any circumstances.
  • All transactions with clients through the banking system must be done through bank accounts in the name of the client or the client’s representative.
  • We do not use a tiered customer due diligence procedure. All clients must complete the full KYC and sanctions screening procedure as defined in our Customer Due Diligence Process (as approved).
  • Any deviation from these principals requires written approval of the directors.

AML & CTF Risk Management and Compliance Program (RMCP)

Maintain AML & CTF RMCP

  • Our organisation adheres to the AML & CTF RMCP of our financial services provider partner, Life Current, to prevent money laundering and terrorist financing.
  • The RMCP is approved by the directors of Life Current and reviewed annually.
  • Life Current has appointed a FICA Compliance Officer who will conduct this review as per their Compliance Monitoring Schedule.

Govern Compliance with the AML & CTF RMCP

  • The directors and leadership of both Fynbos and Life Current ensure all employees and representatives comply with FICA and the RMCP.
  • A compliance function is supervised by the Compliance Officer and, if needed, a Deputy who is an employee of Fynbos.
  • The Compliance Officer provides reports on compliance monitoring and makes recommendations.
  • The Compliance Officer's position is reviewed annually for possible reappointment or replacement.

Licensing and Maintenance

FIC Registration

  • The Compliance Officer ensures the organisation is registered with the FIC within 90 days of starting business.
  • Records of registration, including Org ID and login details, are maintained.

Changes to Registration Particulars

  • Any changes in business details must be communicated to the FIC within 15 business days.
  • The Compliance Officer updates the FIC and keeps records of all changes.

Client Due Diligence Procedures

Understanding New Business Relationships

  • Obtain and record information about the nature and purpose of new business relationships.

Establishing and Verifying Client Identities

  • Verify the identities of clients and their representatives using appropriate KYC and screening processes as defined in our Customer Due Diligence Process.

Avoiding Clients with False Names

  • Do not engage with clients using false names.
  • Report any suspicions to the Compliance Officer.

Terminating Relationships if Due Diligence Fails

  • If unable to verify client identities or obtain necessary information, do not establish or continue business relationships.
  • Report issues to the Compliance Officer.

Avoiding Transactions with Sanctioned Individuals

  • Screen clients against the UN Security Council Sanction List.
  • Report any matches to the Compliance Officer.

Due Diligence for Domestic Prominent Influential Persons

  • Identify if clients are domestic prominent influential persons.
  • Obtain senior management approval and conduct enhanced due diligence and monitoring.

Due Diligence for Family or Associates of Influential Persons

  • Identify if clients or beneficial owners are family members or associates of influential persons.
  • Obtain senior management approval and conduct enhanced due diligence and monitoring.

Due Diligence for Legal Persons, Trusts, or Partnerships

  • Do not establish or continue business relationships with Legal Persons, Trusts, or Partnerships.

Confirming Veracity of Client Information

  • Regularly reassess and confirm client information.
  • Update records if discrepancies are found.

Ongoing Due Diligence and Monitoring

  • Continuously monitor transactions and ensure they match client profiles.
  • Investigate unusual transactions and report them if necessary.

Reporting Duty

Cash Transactions

  • No cash transactions are permitted under any circumstances.

Suspicious Transaction Reports

  • Report suspicious activities to the FIC within 15 days.
  • Maintain records of all reports and related transactions.

Terrorist Property Reports

  • Report possession of terrorist-related property to the FIC within five days.
  • Maintain records of all reports.

Record keeping

Transaction Records

  • Keep detailed records of all transactions for at least five years.
  • Ensure records can be reproduced and are backed up regularly.

Client Due Diligence Records

  • Keep detailed records of all client due diligence for at least five years after the business relationship ends.

Third-Party Record keeping

  • Ensure third-party record keepers provide easy access to records and comply with FIC requirements.

FICA Awareness Training

  • Provide ongoing FICA training to all employees.
  • Keep a record of all training in Life Current’s training register.