<p>
The Centre is an organ of state established in terms of Section 2 of the Financial Intelligence Centre Act 38 No.38 of 2001 (the FIC Act).<br />
It is an institution that functions outside the public service but within the public administration.<br />
The primary purpose of the Centre is to assist in the identification of the proceeds of unlawful activities and to combat money laundering activities as well as the financing of terrorism and related activities
</p>

<p>
    Money Laundering is the process used by criminals to hide, conceal or disguise the nature, source, location, disposition or movement of the proceeds of
    unlawful activities or any interest which anyone has in such proceeds. The act of conducting or causing to conduct two or more transactions with the
    intention of avoiding the duty to report such transactions is a recognised offence in terms of section 64 of FIC Act.
</p>

<p>
    Financing of terrorism is the collection or provision of funds for the purpose of enhancing the ability of an entity or anyone who is involved in terrorism
    or related activities to commit an act that is regarded as a terrorist act. Funds may be raised from legitimate sources, such as personal donations and
    profits from businesses and charitable organizations, as well as from criminal sources, such as the drug trade, the smuggling of weapons and other goods,
    fraud, kidnapping and extortion.
</p>

<br />
<ul>
<li>Sets international standards to combat money laundering and terrorist financing;</li>
<li>Assesses its members’ compliance with the FATF standards through a peer review process of mutual evaluations; and</li>
<li>Conducts typologies studies of money laundering and terrorist financing methods, trends and techniques;</li>
<li>Internationally promotes the adoption and application of measures to combat money laundering.</li>
</ul>

<br />
<ul>
    <li>
        Secure a more transparent and stable financial system that is more attractive to foreign investors.
        <p>
            Corrupt and opaque financial systems are inherently unstable. Excessive money laundering can cause increased volatility of international capital
            flows and exchange rates, market disparities, and distortions of investment and trade flows.
        </p>
    </li>
    <li>
        Ensure that financial institutions are not vulnerable to infiltration or abuse by organised crime groups.
        <p>
            Financial institutions that are exploited in this manner are exposed to reputational risk, financial instability, diminished public confidence,
            threats to safety and soundness, and direct losses.
        </p>
    </li>
    <li>
        Build the capacity to fight terrorism and trace terrorist money.
        <p>
            Terrorists need money to finance attacks. Tracing this money is one of the few preventive tools that a government has against terrorism.
        </p>
    </li>
    <li>
        Meet binding international obligations, and avoid the risk of sanctions or other action by the international community.
        <p>
            The international community—through numerous international treaties, United Nations Security Council Resolutions and best practices—has endorsed
            the FATF Recommendations at the highest political level.
        </p>
    </li>
    <li>
        Avoid becoming a haven for criminals.
        <p>
            Countries with weak AML/CFT systems are attractive to criminals because they provide an environment in which criminals can enjoy the proceeds of
            their crimes and finance their illicit activities with little fear of facing punishment.
        </p>
    </li>
</ul>

<p>
    South Africa was accepted as a member of the FATF in June 2003 after it was evaluated and found to have developed a comprehensive legal structure to combat
    money laundering activities. SA hosted the presidency of the FATF in 2005/2006 which was chaired by the late Professor Kader Asmal.
</p>
<p>
    An on-site FATF evaluation team was hosted by South Africa in August 2008; where SA’s full legal structure to combat money laundering and the financing of
    terrorism was evaluated against the Recommendations issued by FATF. The mutual evaluation report has been published on the FATF portal
    (www.fatf-gafi.org).South Africa received a positive rating from the evaluation team and the FATF.
</p>

<p>
    The Centre’s guidelines cannot impose new obligations or detract from existing obligations. The guidance notes are issued to provide guidance on the
    existing obligations and requirements contained in the FIC Act and Regulations, thus it cannot be enforceable in law, but merely prescribe an acceptable
    standard to indicate the level of efforts expected from responsible institutions in order to comply with the provisions of the FIC Act. The primary purpose
    is to provide guidance to institutions on how they can perform their duties and comply with their FIC Act obligations.
</p>

<p>
    The term “accountable institution” is defined as a person referred to in Schedule 1 of the FIC Act. Thus a person or organisation that carries on the
    business of any entity listed in Schedule 1 of the Act would be regarded as an accountable institution.
</p>

<p>A reporting institution refers to a person referred to in Schedule 3 of the FIC Act, and could be either a motor vehicle dealer or a Kruger rand dealer. </p>

<p>The Money Laundering Control Regulations defines “identification document” in respect of a natural person who is a citizen of, or resident in the republic, as an "official identity document". </p>

<p>Regulation 4 (3) of the Money Laundering Control Regulations, requires that an institution use "information which can reasonably be expected to achieve" verification of an address. In the view of the Centre the address slips issued by Home Affairs does not constitute information which can reasonably be expected to achieve verification of a person's current address, as it is not an independent source document and may be outdated and therefore not reflect current information.</p>

<p>
    A politically exposed person or PEP is the term used for an individual who is or has in the past been entrusted with prominent public functions in a
    particular country. The principles issued by the Wolfsberg Group of leading international financial institutions give an indication of best banking
    practice guidance on these issues. These principles are applicable to both domestic and international PEPs.
</p>
<p>
    The following examples serve as aids in defining PEPs:
</p>
<div>
    <ul>
        <li>
            Heads of State, Heads of Government and cabinet ministers;
        </li>
        <li>
            Influential functionaries in nationalised industries and government administration;
        </li>
        <li>
            senior judges;
        </li>
        <li>
            senior political party functionaries;
        </li>
        <li>
            senior and/or influential officials, functionaries and military leaders and people with similar functions in international or supranational
            organisations;
        </li>
        <li>
            members of ruling or royal families;
        </li>
        <li>
            Senior and/or influential representatives of religious organisations (if these functions are connected to political, judicial, military or
            administrative responsibilities).
        </li>
        <li>
            Families of PEPs should also be given special attention by accountable institutions. The term "families" includes close family members such as
            spouses, children, parents and siblings and may also include other blood relatives and relatives by marriage;
        </li>
        <li>
            Closely associated persons. The category of "closely associated persons" includes close business colleagues and personal advisers/consultants to
            the PEP as well as persons, who obviously benefit significantly from being close to such a person.
        </li>
    </ul>
</div>

<p>
    It is crucial that accountable institutions address the issue of PEPs in their risk framework, referred to in paragraph 2, and group money laundering
    control policy. PEPs should be regarded as high-risk clients and, as a result, enhanced due diligence should be performed on this category of client.
    Heightened scrutiny has to be applied whenever PEPs or families of PEPs or closely associated persons of the PEP are the contracting parties or the
    beneficial owners of the assets concerned, or have power of disposal over assets by virtue of a power of attorney or signature authorisation.
</p>
<p>
    The Wolfsberg principles provide additional guidance on how to recognise and deal with a PEP. In addition to the standardised identification and
    verification procedures, the following prompts are appropriate to recognise PEP:
</p>
<div>
    <ul>
        <li>
            The question whether clients or other persons involved in the business relationship perform a political function should form part of the
            standardised account opening process, especially in cases of clients from corruption prone countries;
        </li>
        <li>
            Client advisers should deal exclusively with clients from a specific country/region to improve their knowledge and understanding of the political
            situation in that country/region;
        </li>
        <li>
            The issue of PEPs should form part of a banks regular KYC training programs;
        </li>
        <li>
            Banks may use databases listing names of PEPs including their families, closely associated persons and advisors.
        </li>
    </ul>
</div>

<p>Each and every business must be involved in the fight against crime by filing suspicious and unusual transactions to the Centre. Your reports will assist the Centre in the fight against money laundering and the financing of terrorism. By reporting suspicious and unusual transactions, businesses will minimise the risk of the proceeds of crime in the country’s financial system. This can lead to a safer business operating environment. Crime and money laundering risk can be minimised when businesses take necessary measures to recognise suspicious and unusual transactions</p>

<p>
    Section 29 of the FIC Act imposes obligation on any person who carries on a business or is in charge of or manages a business or who is employed by a
    business to report suspicious or unusual transactions to the Centre. It provides that required reporters must report if suspect that:
</p>
<div>
    <ul>
        <li>
            the business in which they are involved has received or is about to receive the proceeds of any unlawful activity or,
        </li>
        <li>
            a transaction or series of transactions in which your business is involved has facilitated or is likely to facilitate the transfer of proceeds of
            unlawful activities from one person to another or from one location to another or,
        </li>
        <li>
            a transaction or series of transactions in which your business is involved has no apparent business or lawful purpose or,
        </li>
        <li>
            a transaction or series of transactions in which your business is involved is conducted to avoid giving rise to a reporting duty under FIC Act or,
        </li>
        <li>
            a transaction or series of transactions in which your business is involved may be of interest to the South African Revenue Service in a possible
            investigation of tax evasion, or
        </li>
        <li>
            the business in which you are involved has been used or is about to be used in any way to hide or disguise the proceeds of unlawful activities
        </li>
    </ul>
</div>