FIC loses patience with estate agents and law firms
The Financial Intelligence Centre (FIC) is adopting a hard line with estate agents and legal practitioners who fail to provide requested information about their businesses.
FIC acting director Pieter Smit said during a panel discussion on greylisting at an industry conference of the Financial Sector Conduct Authority that the response by the two sectors — regarded as high risk in terms of money-laundering — to requests for information had been weak.
The information is critical if SA is to be removed from the greylist imposed by the Financial Action Task Force, the body that sets global standards for the combating of money-laundering and terrorism financing. The greylisting resulted in enhanced due diligence, a higher cost of business and delayed transactions for financial institutions.
Smit said the FIC had developed a robust risk assessment tool to supervise each sector but this was only useful if it was fed data from business, which was a challenge with regard to legal practitioners and estate agents who were not used to complying with regulatory pressure.
“We have started imposing administrative sanctions but we have also taken the view that if you are aware of your obligations and you choose not to comply we are going to assume that you are high risk — otherwise why wouldn’t you want to tell us about your business? This is the message we are starting to spread in our discussions with financial institutions which bank these institutions. Hopefully this will improve behaviour.”
Being designated high risk would result in heightened supervision. Smit noted that noncompliance in one business could be passed on to another with which it transacted.
In February, FIC executive manager for compliance Chris Malan highlighted the lack of cooperation by legal practitioners and estate agencies and said the next stage would be to impose a sanction of R50,000 on each head office and branch that had not complied.
In February, Institute of Estate Agents of SA chair Ivan Neethling reported on one estate agent’s experience who found the FIC’s risk and compliance workshops “confusing” and said it was difficult to grasp what was required by the questionnaire.
Continued on Page 2
It is doubtful whether it will be possible or financially viable to attempt to recover the R142m paid to deceased beneficiaries of social grants in the years 2021/22 and 2023/24, social development minister Lindiwe Zulu says.
Replying to a question by Good MP Brett Herron, Zulu said the grant overpayments by the SA Social Security Agency (Sassa) were made to clients of state-owned Postbank.
“Considering that the abovementioned grant overpayments were made to the most vulnerable members of society, Sassa’s ability to recover debt might be more expensive than the debt itself. However, I must point out that each debt, irrespective of the amount, remains ‘recoverable’ until it is written off,” Zulu said.
She said there were a number of questions and factors to be considered when dealing with deceased grant beneficiaries to whom a grant was paid before Sassa received a notice of death from home affairs.
These included if it would be economical to invest resources into recouping a one-month payment made to a deceased grant beneficiary; did the deceased have an estate and its size against the claim; and would recovery cause undue hardship to dependants?
Zulu said Sassa was not a registered creditor to any deceased estate. There was no system interface between Sassa and the office of the master of the high court.
“When death occurs, the majority of social grant beneficiaries’ families make no effort to wind up an estate with the office of the master of the high court or with the magistrate’s office as required by law. Therefore, if no ‘case file’ is created no-one can register as a creditor.”
The minister pointed out all debts were considered “recoverable” until the National Treasury approved their write-off.
Replying to a question by DA spokesperson on social development Bridget Masango on the same issue, Zulu noted recoveries of R10.8m in 2021/22, R17.9m in 2022/23 and R20m in 2023/24 had been made.
Public service & administration minister Noxolo Kiviet said in reply to another question by Masango that Sassa would approach departments about what consequence management had been applied to the 5,812 public servants who fraudulently received the Covid-19 social relief of distress grant.
Sassa had launched an investigation into the 33,833 other public servants who had fraudulently received other social grants.