Task 6 Anti money laundering and fica

• FIC Act


  Financial Intelligence Centre Act
• Money laundering


  An activity that conceals or disguises the nature, source, location or movement of illegal proceeds
• Accountable institution


  An institution that FICA places certain responsibilities on to help in fighting and combating money laundering
• Duties and responsibilities of an accountable institution under FICA


  • Duty to identify and verify clients
  • Duty to keep records of business relationships and transactions
  • Duty to report suspicious transactions
  • Obligation to provide authorities access to information
  • Duty to adopt measures that promote compliance, including training staff and putting in place processes to report suspicious activities
• FICA and its amendments place these duties and responsibilities on accountable institutions to help fight the problem of money laundering
• Duty to keep records

  Of business relationships and transactions
• Money laundering


  An FSP as an accountable institution carries the burden of compliance under the FIC Act
• Responsibility of FSP's representatives


  Ensure compliance with regulations that combat or fight money laundering
• Due diligence


  1. Compile all the necessary documents to find out who the client is

  2. Ensure checks and balances are in place
• FICA penalties


  Maximum punishment: Fine not exceeding 10 million rand and maximum prison sentence of 5 years
• Accountable institutions must implement measures to assist them in complying with FICA
• Accountable institutions must be able to establish and verify the identity of their clients
• Accountable institutions must keep records of business relationships and transactions
• What a representative should do if they accept suspicious money from a client

  Report the suspicious transaction through the company's internal procedures
• Suspicious cash transaction of 49 999.99 rand or more must be reported to the Financial Intelligence Center within 2 working days
• Maximum penalty for failure by an accountable institution to implement internal rules on FICA

  10 million rand or 5 years imprisonment
• Accountable institutions in terms of FICA

  • Estate agent
  • Bank
• A church is not an accountable institution in terms of FICA
• 3 stages of money laundering

  Placement stage

  Layering stage

  Integration stage
• The placement stage involves placing dirty money into the financial system.
• The integration stage involves converting the dirty money back into clean money that can be used without suspicion.
• The layering stage involves moving the proceeds from one place to another, making it difficult to trace back to its source.
• Money laundering is the process of concealing the origins of illegally obtained funds through various methods such as smuggling, structuring transactions, using false identities, and other techniques.
• Money laundering is the process of making illegally obtained money appear legal.
• In the first stage (placement), criminals introduce their illicit funds into the legitimate economy.
• Criminal organizations use different strategies to launder large amounts of cash, including breaking up deposits into smaller amounts below reporting thresholds, using multiple accounts or bank branches, and employing professional money launderers.
• Laundered money may also be transferred overseas via wire transfers, traveler's checks, or courier services.
• Criminal organizations use different types of financial institutions to launder money, including banks, casinos, shell companies, and offshore accounts.
• Integrity refers to being honest and having strong moral principles.
• Transparency refers to openness and clarity in financial dealings.
• Accountability refers to taking responsibility for actions and decisions made within an organization.
• Organized crime syndicates may also use shell companies, offshore banking centers, and other tactics to hide their activities from law enforcement agencies.
• Financial institutions are required by law to report suspicious activity related to money laundering to regulatory authorities.
• Regulatory agencies have the power to investigate suspected cases of money laundering and impose penalties on individuals and financial institutions involved.
• Anti-money laundering laws aim to prevent the movement of criminal proceeds across borders and ensure that financial systems do not facilitate such activities.
• Offshore accounts allow criminals to hide assets from law enforcement agencies and avoid taxes.
• Money laundering is the process of making illegally obtained funds appear legal by hiding their true source.
• Banks must verify customer identities when opening new accounts and monitor account activity for any suspicious behavior.
• Money laundering involves concealing the source of funds obtained through criminal activities by transferring them into legitimate sources.
• Anti-money laundering measures aim to prevent criminals from using financial systems to hide their illicit gains.