Essential Reporting Obligations for Accountable Institutions

As an Accountable Institution (AI), a certain amount of anxiety arises when the topic of reporting obligations and the appropriate timing for reporting is mentioned. All AIs play a crucial role in South Africa’s efforts to prevent money laundering and terrorist financing, making their reporting responsibilities essential.

It is imperative that AIs report suspicious and unusual activities and transactions that are potentially linked to Money Laundering (ML) or Terrorist Financing (TF) to the Financial Intelligence Centre (FIC). The reporting obligation is carried out on the FICs electronic system, GoAML.  

There are three main regulatory reporting streams that you need to be aware of:

1. Cash threshold report (CTR) – on transactions i.e. cash received or issued – exceeding R49 999.99.

The reasoning behind reporting cash transactions is that, as a medium of exchange, it is highly favoured by money launderers due to its inherent un-traceability, efficiency of use, difficulty in identifying its true source and its ability to convert its illicit origins into a legitimate asset ie: a vehicle or property. 

The reporting timeline is three business days. Refer to Guidance Note 5C.

2. Suspicious and unusual transaction report – on transactions that are unusual or arouse suspicion in terms of money laundering or terrorist financing activities. Depending on whether the transaction is completed or incomplete you would submit a suspicious transaction report (STR) or a suspicious activity report (SAR). These reports are subjective in the eyes of the reporting institution. These reports have a timeline of fifteen business days from the time the suspicion is formed. Please refer to Guidance Note 4B. 

Red Flags to Watch for in Reporting Obligations

It is also worthwhile as an AI to understand what red flags are within your industry. The FIC website offers various industry-specific guidance to assist you in identifying these concerns. 

• Be mindful of unusual business practices which can include; the refusal to provide customer due diligence information, or perhaps documentation that is provided is foreign and cannot be verified - question if there is an attempt to conceal underlying client information performing the transaction or Ultimate Beneficial Owner (UBO?). Is there a potential match on the TFS list? 
• Consider if a customer provides insufficient, vague or suspicious information concerning the reasons for a transaction. Look at accounts that show unusual or expected activity, unexpectedly large cash deposits, immediate withdrawals, or frequent exchange of small denomination notes for larger denomination notes.
• Pay attention to the involvement of significant amounts of cash in circumstances that are difficult to explain. 

Consequences of Non-compliance

It is also important that failure to report has serious non-compliance consequences, which includes jail time and fines. The ability to fulfil your reporting obligations lies strongly in meeting your other FICA obligations. 

Contact Us for Compliance Assistance

Ensuring you are fully compliant with South Africa’s reporting obligations can be complex. If you're looking for expert support and guidance on your compliance needs, contact us today for our comprehensive compliance services. Our team can help you navigate the reporting process, stay compliant, and mitigate the risks of non-compliance.