Dear Valued Clients,
We hope this message finds you well. We are writing to inform you of an important development that impacts all high-value dealers within our industry.
Recent legislative changes have officially classified the jewellery industry as an accountable institution under the Financial Intelligence Centre Act (FICA). This update aims to increase transparency and combat financial crimes associated with high-value goods.
Key Legislative Change
On December 19, 2022, a new category was added to the list of accountable institutions in Schedule 1 of FICA, 2001. This is part of an effort to address gaps in South Africa’s anti-money laundering and counter-terrorism financing policies. This law may affect your business operations.
Definition of High-Value Goods Dealers (HVGD)
According to Item 20 of Schedule 1 to FICA, a HVGD is defined as:
“A person who carries on the business of dealing in high-value goods in respect of any transaction where such a business receives payment in any form to the value of R100,000 or more, whether the payment is made in a single operation or in more than one operation that appears to be linked, where ‘high-value goods’ means any item that is valued in that business at R100,000 or more.”
This broad definition covers a wide range of trading activities. Based on initial guidance from the Financial Intelligence Centre (FIC), this includes dealers in precious metals, precious stones, diamonds, antiques, collectibles, fine art, boats, aircraft, and luxury motor vehicles valued at R100,000 or more.
Obligations for Accountable Institutions
As an accountable institution, you must:
- Register with the FIC: Use the FIC’s online registration and reporting system, goAML. Registration is free.
Register here - Develop and Implement a Risk Management and Compliance Programme (RMCP): This programme outlines the necessary processes and procedures to comply with FICA obligations using a risk-based approach.
- Implement Customer Identification and Verification Processes: Conduct thorough customer due diligence.
- Appoint Compliance Officers: Depending on your needs, you may also need money-laundering reporting officers.
- Regularly Train Employees on FICA Compliance: Ensure your team is well-informed and compliant with FICA regulations.
Directive 7 of 2023
Issued by the FIC on March 31, 2023, Directive 7 mandates all accountable institutions listed under Item 20 (high-value goods dealers) to submit information on their understanding of money laundering and related financial crimes, along with their assessment of compliance with FICA obligations. This is done through a risk and compliance return questionnaire, due by July 31, 2023 (covering the period from January 1, 2023, to June 30, 2023).
Note: This return helps the FIC gauge your understanding of FICA and the processes you have in place. Be honest about your current state, even if you have limited knowledge or processes. This transparency allows the FIC to provide necessary training and support. While the deadline has passed, submitting your return now can reduce the risk of penalties.
Moving Forward
As our industry enters this new era of accountability, we encourage you to view FICA compliance not just as a regulatory requirement but as an opportunity to enhance your business practices and uphold the integrity of our sector.
Yours sincerely,
Moon Investments Compliance Team
