FIC issues sanctions to the tune of R77m

THE FINANCIAL Intelligence Centre (FIC) says it has issued sanctions to the tune of R77 million for non-compliance during its inspections in the 2019/20 financial year.

In the annual report tabled in Parliament, the centre’s head Xolisile Khanyile said they contributed to 38 judicial actions for the recovery of close to R3bn in criminal proceeds.

Khanyile also said the centre was instrumental in blocking more than R70.7m as suspected proceeds of crime.

In its report, the FIC reveals that it found that the non-compliance by institutions was mainly on not reporting all cash transactions above the R24 999 threshold.

“This has been an ongoing deficiency among institutions which have FIC Act reporting obligations. This is despite regular forums, awareness-raising sessions, training and the publication of user information,” the report said.

“Reporting cash transactions above the prescribed amount provides markers for possible illicit financial activity, so it is important that financial and non-financial sectors remain alert to the requirement to report transactions of R24 999 99 and above.”

The FIC and supervisory bodies issued a total of 37 sanctions with a total financial penalty of R77.3m.

This was up from 27 sanctions issued in 2018/19 with a total financial penalty amount of R503m.

The report showed that FIC issued 22 sanctions – 21 against non-compliant motor vehicle dealers and one against a Kruger Rand dealer.

“The financial sanctions, which amounted to more than R39m, were proportionate to the nature, seriousness and extent of the non-compliance, and took into account mitigating factors.

“Six of the 22 sanctioned entities have lodged appeals against the sanctions imposed.”

The report also said the FIC received close to 6 million cash threshold reports, up from 5.21 million in 2018/19

“A total of 299 256 suspicious and unusual transaction reports were submitted to the FIC in 2019/20. The FIC received 84 terrorist property reports in the reporting period.”

The report also said the FIC responded to 2 017 requests for financial intelligence from law enforcement and security agencies.

“This is an increase in the number of requests for intelligence reports from 1 840 in the previous year,” it said.

“The FIC referred to 745 financial intelligence reports to law enforcement and other authorities in the criminal justice system for investigation during the reporting period. Most of the intelligence reports produced in 2019/20 related to fraud, corruption, narcotics and tax crimes.”

Khanyile said the FIC’s main organisational challenges during the year under review continued to be budgetary constraints as well as the recruitment and retention of specialists such as forensic accountants.

Khanyile further indicated that the FIC would generate proactive financial intelligence for use by the competent authorities to help prevent crime and to assist with the apprehension and prosecution of criminals on a more proactive basis.

“This also implies that the FIC shall become more assertive in assisting law enforcement authorities.

“The FIC will therefore increase its capacity and make its capability available to the Directorate for Priority Crime Investigation and other arms of law enforcement and investigation across the country.

“This is of particular importance as the government has prioritised making South Africa safer for all its citizens,” she said.