In day-to-day operations, most businesses interact directly and indirectly with clients and service providers. Many transactions that take place during this interaction are legitimate transactions, whereas some of these transactions might raise a few questions as to the validity of the source of the money, or even just that the transaction does not make business sense.
When the business becomes aware of suspicious or unusual activities or transactions, these activities or transactions must be reported to the Financial Intelligence Centre (FIC).
The Financial Intelligence Centre Act 38 of 2001 (FIC Act) is a pivotal component of the regulatory architecture to protect the integrity of the South African financial system and support the criminal justice system.
The FIC Act compels all businesses to report transactions and activities to the FIC that they deem suspicious or unusual in terms of section 29 of the FIC Act. All businesses include accountable institutions (such as banks, casinos, estate agents, financial services providers among others) and reporting institutions (for example motor vehicle dealers and Kruger Rand dealers) which are listed as Schedule 1 and 3 in the FIC Act respectively, and which have additional reporting responsibilities in relation to cash transactions in terms of section 28 of the FIC Act.
Suspicious and unusual transaction or activity reports (STRs) contain valuable information and form the basis for much of the analysis and dissemination of information undertaken by the FIC.
The information obtained from the reports submitted allow the FIC to get a ‘bigger picture’ of the flow of money − seeing how the money moves from one place to another, or even to see how different accountable or reporting institutions were used as vehicles for laundering money.
The FIC Act requires that a STR be submitted when anyone who is involved in a business directly or indirectly (employed by, owns or manages the business) encounters a transaction or activity that ‘does not feel right’. STRs must be submitted within 15 days of forming a suspicion concerning a transaction or activity. An STR does not prevent you from continuing with the transaction and you may continue to transact. The STR you submit is simply to alert the FIC that you suspect a client may be abusing your entity for purposes of money laundering.
The information extracted from STRs assists in the development of financial intelligence reports which are valuable to law enforcement, investigative and prosecutorial authorities in crime detection, investigation and prosecution.
All businesses need to be alert to suspicious or unusual activities and transactions, and then, most importantly, to submit STRs, thereby helping to fight crime. In the last financial year, the FIC received 358 412 STRs. Using these STRs, other reports and data, the FIC was able to produce 1 525 reports for law enforcement agencies; and respond to 2 145 requests for information.
All that is required to submit an STR to the FIC, is to register on the organisation’s website on www.fic.gov.za.
Please note that registration is a once-off process and no institution can submit any report to the FIC without first registering.
For more information on registering your business with the FIC, contact 012 641 6000 or visit
www.fic.gov.za
