Closing accounts should be ‘last resort’ as banks’ actions hinder FIC

THE Financial Intelligence Centre (FIC) says the closing of bank accounts should be a last resort, but the banks, instead, rush to close them, which makes it difficult for the FIC to do its work.

During a presentation to the Standing Committee on Finance (SCoF), on February 15, 2022, the FIC laid out how rushing to close clients’ banking accounts was a premature step.

Nor did the agency accept a bank’s explanation that closure was done as a last resort.

The FIC said it had informed the banks that it did not appreciate the process of closing a customer’s account because it would not, then, be able to freeze funds once an account was closed and the money removed.

The FIC, whose mandate it is to watch out for signs of money laundering, terror financing and identifying the proceeds of crime, states in its 2016/17 annual report that the FIC Act does not effectively give banks unlimited power.

The Act, not banks and other businesses, is the authority on defining what is a domestic or foreign prominent influential person.

The Act does not, however, assume that prominent influential persons are involved in financial crime or associated with illicit financial flows – the risk-based approach serves to protect customers. It also does not empower the FIC or banks to investigate financial crimes or participate in criminal prosecutions.

Further, the Act does not invade the privacy and dignity of customers, nor does it require financial and other institutions to avoid doing business with any category of customers or to end their relationships with particular customers.

On the contrary, the Act advocates for a lower administrative burden for most, who might be targets of financial crimes or in a higher risk category than most customers.

At the SCoF presentation, MPs raised their concerns regarding several regulations and processes currently in place, stating that both the Treasury Department and the FIC thought that banks needed to adopt a risk-based approach, as opposed to the current rules-based approach.

This comes as Sekunjalo Investments’ Chairperson, Iqbal Survé and related entities are challenging the banks’ unilateral decisions to close bank accounts.

investigations@falcons.org.za https://falcons.org.za/