First National Bank (FNB), a subsidiary of the FirstRand Group and one of the country’s so-called “big four” banks, has welcomed the introduction of the Financial Intelligence Centre (FIC), saying it is a positive move for the image of South Africa internationally and could lead to increased levels of investments in the country.
“The introduction of the FIC and related legislation to combat money laundering and organised crime can only enhance South Africa’s international image,” says Wendy Lucas-Bull, CEO of FNB Retail.
“With this latest move, South Africa can be seen as a country that is serious about complying with its international obligations to fight organised crime and terrorism. As a result, South Africa has now been accepted as the 32nd member of the international Financial Action Task Force.”
The Financial Intelligence Centre Act of 2001, requires banks (as well as other accountable institutions) to have more rigorous processes for opening new accounts and to monitor and report suspicious transactions that could come from the proceeds of crime. Coupled with the Banks Act of 1990 and the Prevention of Organised Crime Act of 1998, the new legislation provides powerful tools to fight crime and, in particular, money laundering.
In 2002, the Minister of Finance, Trevor Manuel, told Parliament that the value of laundered funds in South Africa could be between R20-billion and R80-billion a year.
The definition of money laundering in South African legislation includes any act or transaction derived from criminal activity or involving proceeds of a crime. Failure to report such transactions is an offence with penalties of up to a R10-million fine or a maximum of 15 years in jail.
Lucas-Bull says the impact on bank customers could be seen as an inconvenience but the overall effect is going to be positive for the fight against crime.
“Customers wanting to open new bank accounts will be required to provide proof of residential address, identity documents and other personal details. In addition, the banks will be verifying the details of their existing clients.”
However, despite their additional responsibilities, Lucas-Bull stresses that banks are not going to become police officers as the obligations extend only to reporting on transactions that could involve the proceeds of crime.
Banking is not the only sector affected by the introduction of FIC. Estate agents, accountants and attorneys are also required to report suspicious transactions.
“For instance property purchases paid for in cash could also involve money laundering and hence constitute a reportable transaction by the estate agent involved.” – I-Net Bridge