/ 10 November 2016

​Don’t vilify the FIC for sticking to the law

No exception: Minister of Finance Pravin Gordhan on his way to present his budget speech in Parliament. Not even he has access to details of suspicious transactions.
No exception: Minister of Finance Pravin Gordhan on his way to present his budget speech in Parliament. Not even he has access to details of suspicious transactions.

The Financial Intelligence Centre (FIC) strongly rejects the suggestion created in the media that it is not co-operating fully with its law enforcement and other competent authority partners.

Ordinarily, the FIC prefers to deal with operational matters such as the distribution of information directly with its partners. However, this matter has recently been brought into the public domain and, along with it, the allegation that the FIC is not sharing information as per its mandate. It is in the media also that, because of the lack of co-operation from the FIC, an investigation by the Hawks has had “to grind to a halt”. This claim is clearly nefarious, mischievous and without basis.

In terms of its mandate, the FIC responds to requests for information from law enforcement authorities and other competent authorities, including the Hawks. In doing so, the FIC follows legislative processes compelling it to co-operate with law enforcement and other competent authorities, and has processed thousands of requests for information since its establishment in 2003. In the past year alone, the FIC has responded to nearly 2 000 requests for information in support of investigations.

The supposed lack of co-operation by the FIC is in relation to reports on transactions mentioned in a certificate attached to a founding affidavit filed by the minister of finance in a high court application on October 14 this year.

Since the minister’s application, there have been several questions directed at the FIC about the Financial Intelligence Centre Act, 2001 (No 38 of 2001), and there has been a growing narrative about the organisation being unco-operative in allowing people access to the reports in question.

We suspect that this is because there is a general misunderstanding of a report on a transaction, that is deemed suspicious or unusual and our role in protecting the reported information.

A report on a suspicious or unusual transaction contains information about a person’s identity as well as the person’s most private information, such as bank account details, signatories on accounts and balances in accounts.

It also contains information about financial transactions, and the parties and amounts involved. This is private and confidential information that is protected under the Protection of Private Information Act and the Constitution.

The FIC has never given copies of reports on suspicious or unusual transactions to investigators, politicians (including the minister of finance, who is the executive authority responsible for the FIC) or any other person, or allowed any such person access to such reports. Any suggestion of such allegations is incorrect.

The minister’s application contained a certificate from the FIC and not the actual, confidential suspicious and unusual transaction reports.

Unlawful access to such sensitive information has serious ramifications, including possible criminal liability. A report on a suspicious or unusual transaction also contains other highly sensitive information such as details about who reported the transaction and the reasons the relevant transactions were considered to be suspicious or unusual.

The FIC is entrusted to protect the confidentiality of this information and to ensure no person’s rights are unlawfully and unfairly prejudiced through illegitimate access, be it those who reported the suspicious or unusual transaction, the reported person or third parties mentioned in the report.

The FIC is, therefore, the gatekeeper of this information and its job is to protect and preserve citizens’ rights. If we fail in our duty, citizens’ rights as enshrined in the Constitution will be unfairly prejudiced.

Access to the information reported to the FIC is regulated in the FIC Act and the requirements to access this are also defined in the Act. These safeguards were put in place by Parliament and not the FIC. These laws were put in place to protect citizens’ rights and prevent abuse of their information.

If we deviate from the standards set in law, we undermine the very safety net built by Parliament to balance the interests in having access to private information for lawful purposes in the application of the criminal justice system with the protection of our citizens.

One of the requirements to access this information includes the need for the requester of the information to have a national mandate to investigate an unlawful activity. Another requirement is the need for the investigating authority, at the very least, to indicate what unlawful activity is being investigated.

These are very low standards for access to such privileged information, far lower than the test used by our courts to grant warrants to access similar information for evidentiary purposes.

These are the factors that would confirm that information reported to the FIC is required for a legitimate reason and, once these criteria have been met, the FIC has no discretion to refuse a request for the sharing of information.

Private persons are not entitled to access information reported to the FIC and, in particular, not the content of reports on suspicious or unusual transactions.

It is very unfortunate that this instance — failure by the requester of this information to meet the legislative standard — has been interpreted as the FIC being unco-operative.

However, the FIC cannot become party to the arbitrary violation of citizens’ rights and the legislative standard designed to protect our citizens. Instead, where requests from competent authorities, such as law enforcement agencies, are defective, the FIC assists by indicating what is required from the requester to lay a proper legal basis for the sharing of requested information.

We also want to point out that the contents of a report on a suspicious or unusual transaction is hearsay by nature and is based on suspicions and therefore will not meet evidentiary standards set by our judiciary for use in certain legal proceedings.

The FIC Act provides that any person making such a report may not be compelled to testify in criminal proceedings that may follow the report and that their identity may not be revealed without their consent.

Thus it is domestic and international practice that the actual content of a report on a suspicious or unusual transaction cannot be used to support a conviction in a criminal prosecution.

The reports we refer for investigation do not contain the actual suspicious or unusual transaction reports made to us. Instead it contains a substantial amount of information relating to descriptions of the transactions or activities relating to the financial conduct of reported person(s) and how those transactions or activities are linked with the person(s) mentioned in the FIC’s referral.

The FIC extracts this information from the reports that persons make to the FIC.

In addition, a referral from the FIC also contains the FIC’s analysis of the events mentioned in the referral and their potential links to unlawful activity, as well as the FIC’s advice on the potential unlawful activity the recipient of the referral may wish to pursue in an investigation.

But any suggestion that the FIC refers mere reports for investigation is technically and factually incorrect.

The FIC wants to assure South Africans that it will continue protecting citizens’ rights despite an onslaught of negative and disparaging remarks regarding co-operation. Our records reflect numerous citations from law enforcement agencies for outstanding co-operation.

Lastly, we want to assure all law enforcement agencies and victims of crime that the FIC will co-operate lawfully to make our information available in order to combat unlawful activity in South Africa.

Murray Michell is the director of the Financial Intelligence Centre