FIC gets strict with car dealers
The Financial Intelligence Centre (FIC) intends to place much more stringent reporting obligations on car dealerships because they are regarded as prime targets for illicit financial activity.
The role of the FIC is to combat money laundering and terrorism financing and it requires that accountable and reporting institutions submit financial reports to it as well as reports on suspicious financial transactions. After analysis of these, the FIC may refer a financial intelligence report to the relevant authorities for investigation and possible prosecution.
In 2018/2019 the FIC referred 1,054 matters for further investigation and blocked more than R53.6m as suspected proceeds of crime, according to the centre’s annual report tabled in parliament on Friday.
The focus on motor dealerships comes at a time when the use of one dealership in alleged corruption by crime intelligence officers and their use of a secret slush fund was highlighted during evidence to the Zondo commission of inquiry into state capture last week.
Senior Hawks detective Col Kobus Roelofse told the commission that R143,621.78 had been transferred from the Centurion-based Atlantis Motors dealership to a WesBank Vehicle Finance account in alleged settlement of the amount outstanding on a vehicle registered in the name of N Munusamy, assumed to be journalist Ranjeni Munusamy, in 2008.
He said the alleged payments were discovered during a probe into claims of corruption between crime intelligence officers and Atlantis Motors.
Munusamy has denied the payment allegations.
Sixteen car dealers — including Atlantis Motor Group of Centurion — were fined a combined amount of about R12m by the FIC in 2018/2019 for failing to submit cash threshold reports, which refer to single transactions that exceed the threshold amount. All such transactions have to be reported to the FIC.
The existing cash threshold for all transactions of R25,000 will be changed in 2019 to all transactions of R50,000.
“Large amounts of cash flow through motor vehicle dealerships every day, making these businesses prime targets for illicit financial activity,” the FIC annual report said. “During the course of 2019/2020 motor vehicle dealerships will be reclassified as accountable institutions. This will place additional regulatory reporting obligations on them to ensure the FIC receives comprehensive compliance information that will strengthen the organisation’s ability to identify and combat financial crime in this industry.”
Car dealerships, as well as dealers in Krugerrands, are categorised as reporting institutions and do not have to implement the same strict due diligence and know-your-customer requirements that accountable institutions have to do.
Accountable institutions are also required to implement a risk management and compliance programme, keep records of customers’ transactions and submit regulatory reports.
Both reporting and accountable institutions have to register with the FIC.
Accountable institutions that are listed in a schedule to the act include long-term insurers, casinos, attorneys, estate agents and banks.
There are 42,353 institutions registered with the FIC, up from the previous year’s 40,799. They submitted 288,434 suspicious and unusual transactions to the FIC in 2018/2019.