Navigating FATF Grey List Compliance: What High-Value Goods Dealers in South Africa Need to Know
With South Africa on a deadline to get themselves off the Financial Action Task Force (FATF) Grey List, the Financial Intelligence Centre (FIC) have stepped up their inspections and have issued 28 Administrative Sanctions since January 2024. This is bound to increase as more inspections are carried out before the FATF review in September. We can also confirm that High Value Goods Dealers (HVGD’s) are being inspected, and although none of them have been fined yet, this gives you an idea what sanctions are being imposed and why. These are the areas where AI’s are being found non-compliant and the fines vary from R 10 000.00 to R 600 000.00. And these fines are for the smaller AI’s. The banks, insurance companies and other larger financial services providers are generally fined by their regulators, The South African Reserve Bank (SARB) and The Financial Services Conduct Authority (FSCA). The most recent fine in this sector was R 16 000 000. The biggest portion of those fines was for not having processes in place to detect suspicious and unusual transactions. With the next FATF review in September and the final one in February 2025, we can expect more inspections, fines, directives etc. The South African Diamond & Precious Metals Regulator (SADPMR) will also more than likely issue their new compliance roadmap as they too, have to be much more stringent as the supervisory body of a sector of High Value Goods Dealers. If we are not removed from the Grey List next year, we go through the whole process again, which probably means much more stringent measures being put in place. There are various companies that deal with FICA compliance who can assist you (for a price) but many of them also have free webinars, articles, events and newsletters which are extremely educational and free. We would advise that you have a look at the following websites: The bottom line for all this is that it will be extremely prudent for all HVGD’s to familiarise themselves with the new legislation and understand how beneficial this will be for us in the long run. South Africa has a well documented history of fraud, corruption and money laundering but what you might not realise is that we are known to the FIC to be a hub / transit point for terrorist and proliferation financing, with gold and diamonds being at the top of the list for moving money easily across borders. As newly listed Accountable Institutions we actually now have the opportunity and tools to assist in combating fraud and corruption in the industry and, in my opinion, this is a huge step in the right direction. Contact Shani Schreuder on shani@cpmct.co.za for assistance or more information.
