• Cash threshold reports (CTR) – on transactions i.e. cash received or issued, – exceeding R49 999.99. The threshold was recently increased by an amendment to the FIC Act. Please refer to Guidance Note 5C on the topic.
• Suspicious and unusual transaction reports – 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. Please refer to Guidance Note 4B on the topic.
  
• Terrorist property report (TPR) – this is where there is a match with one of the parties to the transaction to the targeted financial sanctions (TFS) list or United Nations Security Council Resolution 1267 list. This is factual reporting. Please refer to Guidance Note 6A on this topic. 

SUSPICIOUS AND UNUSUAL TRANSACTION REPORTS

Accountable institutions that encounter a financial transaction or activity that causes suspicion and is potentially linked to money laundering or terrorist financing must report the suspicion to the FIC. 

The obligation to report stems from section 29 of the FIC Act and is referred to as a suspicious and unusual transaction report (STR). The reporting of suspicious and unusual transactions is regarded as an essential element of the AML/CFT/PF programme for every country. 

Businesses are best placed to identify unusual and suspicious transactions and activities due to their intimate knowledge of the customer's business, financial history, background, and behaviour. The FIC relies on information provided by reporters to identify the proceeds of crime and combat money laundering and terrorist financing. 

What constitutes a suspicious and unusual transaction or activity?

STRs must be filed when the institution knows or suspects that is has received or is about to receive the proceeds of crime, or is related to terrorist activity, and when it is known or suspected that an activity or transaction:

• Is linked to the proceeds of unlawful activity
• Facilitates the transfer of proceeds of unlawful activities
• Has no apparent business or lawful purpose
• May be relevant to the investigation of an evasion or attempted evasion of a duty to pay tax
• Relates to the offence of financing of terrorist and related activities
• Is in contravention of the prohibition to provide finance to a sanctioned person under section 26B of the FIC Act
• Is structured with the purpose to avoid being reported in terms of the FIC Act. 

When filing an STR, the reporter does not have to prove that the funds involved in the transaction are linked to a crime, as the STR is based upon suspicion. There is also no monetary limit or threshold applied to STRs, where there is a suspicion or knowledge, the transaction or activity must be reported irrespective of the amount involved. An activity can also raise a suspicion, where there is no monetary value. This could include a cancelled transaction, a transaction in which enquiries are made but not conducted or any other behaviour that seems suspicious. 

A suspicious situation may involve several factors that may on their own seem insignificant but taken together may raise suspicion concerning that situation. The context in which a situation arises is a significant factor in assessing suspicion. This will vary from business to business and from one customer to another. 

The following factors may raise your suspicion about a transaction:

• The payment of commissions or fees that appear excessive in relation to those normally payable
• Transactions do not appear to be in keeping with normal industry practices
• Transactions seem to be unusually large or otherwise inconsistent with the client's financial standing and where a client provides insufficient, vague, or suspicious information concerning a transaction. 

When a transaction has not taken place, but the client's behaviour causes suspicion that the institution may be abused for money laundering or terrorist financing, this must be reported this as suspicious or unusual activity report (SAR). 

Time frame and manner of reporting

All STRs must be submitted as soon as possible, but no later than 15 days after the institution becomes aware, or suspicion is raised regarding an activity or transaction. 

It is important to know that the 15 days is not a target or a time frame but rather an absolute time outlier. The quicker the FIC receives the STR, the better the chances of recovery of illicit funds. 

Implications of filing a report

Submitting a section 29 report does not prevent the business from continuing with the transaction, and the transaction may therefore continue. By submitting the STR, the business is simply alerting the FIC that it suspects an individual or entity may be abusing their business for purposes of money laundering. 

The FIC Act protects the identities of those involved in making a report to the FIC. A person involved in making a report cannot be forced to give evidence in criminal proceedings concerning such a report. However, such a person may choose to do so voluntarily. 

A person involved in the making of a report may not inform anyone – including the client or any other person associated with a reported transaction – of the contents of a suspicious transaction or activity report or the fact that such a report has been made. Should a person inform anyone, this would be an offence in terms of the FIC Act and is referred to as tipping off. 

What happens to an STR after it is submitted to the FIC?

Once the FIC receives the STR, analysis and interpretation of the information contained in the report will be conducted.  The FIC uses the reported information to develop its financial intelligence which it shares with law enforcement, prosecutorial and other competent authorities for their investigations and applications for asset forfeiture where necessary. 

Given the sensitivity of the information in STRs and the nature of the intelligence that results from the information obtained, the FIC cannot provide any feedback to any reporter on the status of an STR, or if a particular STR has led to any form of analysis or intelligence. The FIC is only permitted to make information available to specific authorities as listed in section 3 of the FIC Act. 

What happens if an accountable institution does not submit an STR to the FIC?

Failure to submit an STR to the FIC could lead to imprisonment for a period not exceeding 15 years or to a fine not exceeding R100 million. 

Please refer to Guidance Note 4B  on the topic and User Guide on uploading an STR.  

Video on how to file an STR:

CASH THRESHOLD REPORTS

The FIC Act provides for the obligation to report cash transactions above a prescribed threshold in terms of section 28 of the FIC Act. Accountable institutions must report cash transactions of more than R49 999.99. 

Cash threshold reporting provides the FIC with a mechanism to proactively monitor and report on cash transactions which may be linked to money laundering activities so that potential proceeds of crime are timeously identified and investigated. 

Analysis of CTRs is important in helping to decipher possible underlying crime patterns and trends, as well as syndicated or cash-intensive criminal activity. 

What is cash?

Cash is defined in section 1 of the FIC Act as: coins, and paper money of the Republic or of another country that is designated as legal tender and that circulates as, and is customarily used and accepted as, a medium of exchange in the country of issue; and travellers' cheques. 

Cash does not include negotiable instruments, a transfer of funds by means of bank cheque, bank draft, electronic funds transfer or other written order that does not involve the physical transfer of cash, and these methods of transferring funds will not be covered by the cash threshold reporting obligation. 

Time frame and manner of reporting

All cash threshold reports must be filed with the FIC as soon as possible but no later than three business days from the date on which the accountable institution or any of their employees, have become aware of the transaction. 

Physical cash payments in excess of the threshold amount received by the affected accountable institution must be reported.  Where an affected accountable institution pays a client physical cash of R50 000 or more, this has to be reported to the FIC. 

The affected accountable institution will also be responsible to report cash in excess of the threshold amount received by an agent on their behalf e.g. cash received by a bank on behalf of an affected accountable institution. 

Where cash in excess of the threshold amount is received or paid by a bank into or from an account held in the name of the affected accountable institution, there is a duty on the bank as well as on the affected accountable institution to report the cash transaction to the FIC.​​ 

What happens if an accountable institution does not submit a CTR to the FIC?

Failure to submit a CTR to the FIC could lead to imprisonment not exceeding 15 years or to a fine not exceeding R100 million; or to an administrative sanction​.

Please refer to Guidance Note 5C on the topic. ​​