Lawyers, estate agents lashed for stalling greylist exit

The Financial Intelligence Centre (FIC) has labelled the response by lawyers and estate agents to its call in February for these professionals to submit risk and compliance returns (RCRs) that will help South Africa escape its greylisting as “not good enough”.

This comes as the FIC needs to submit an updated report on compliance to the Financial Action Task Force (FATF) by the end of this week.

Legal practitioners’ offices and estate agents have been identified as high-risk categories by the global body that monitors money laundering and terrorism financing.

The number of estate agents and legal practitioners registered with the FIC remains stubbornly low at 55% and 60% respectively.

At a media presentation in February, the FIC warned that of the country’s roughly 16 000 legal practitioner offices, only 52% had submitted risk and compliance reports.

Just 42% of the 9 000 estate agents had submitted reports. The expected compliance rate is 100%, or close to 100%, says the FIC.

Slight improvement, but not enough

While the latest figures are slightly improved from February, they are nowhere near enough to satisfy the FATF that SA is serious about removing itself from the greylist.

SA was placed on the greylist in February last year due to non-compliance with 20 of the reporting categories identified by the FATF.

There have been improvements in 18 of these categories since then, but the FIC warns that the sluggish response from lawyers’ offices and estate agents could derail efforts to remove the greylisting label by next year.

Looming deadlines and notices

The FIC has several looming deadlines to show SA is making good progress in addressing these risks, with a crucial deadline approaching in May.

The RCR is key to this identification of high-risk entities. It is also an important tool for entities to improve their understanding of the risks they face of money laundering, terrorist financing and proliferation financing abuse.