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Why Must My Firm Register as an Accountable Institution with the Financial Intelligence Centre (FIC)?
- 06 June 2024
- Accounting
- Lynette Badenhorst
Money laundering involves manipulating money or property to disguise its true origin. Criminal activities such as drug trafficking, human trafficking, racketeering, and corruption generate large profits for those involved. These illegal earnings cannot be openly used without risking detection by authorities, which could lead to prosecution and forfeiture of assets. To benefit from their illicit proceeds, criminals must conceal their origins through money laundering, making unlawfully acquired funds appear legitimate.
Accountants, particularly those involved in trust and company services, are increasingly exploited for money laundering purposes. Criminals use these professionals to disguise beneficial ownership by creating complex corporate structures that hide the true owners of assets, making it difficult for authorities to trace the funds back to their illicit sources.
Illegal proceeds from foreign countries are sometimes moved to South Africa through accounting firms, which help conceal the origin of the money. This allows criminals to distance themselves from the source of funds and evade taxes. Accountants' involvement in these activities lends an appearance of legitimacy to criminal enterprises. By managing financial transactions and advising on the creation of trusts and companies, they can help criminals integrate illegal funds into the legitimate financial system.
Money laundering is not the only concern. The financing of terrorism involves collecting and providing funds to support terrorist activities, organisations, or individuals. Unlike money laundering, the primary goal is to conceal both the financing and the nature of the activities being financed. Proliferation financing involves providing financial support for the development and transfer of weapons of mass destruction. Both threats often involve the services of accountants and Trust Company Service Providers (TCSPs).
As an accounting professional, it is crucial to be aware, informed, and vigilant about the risk of your firm being abused for money laundering purposes by criminals.
For these reasons, Company and Trust Service Providers have been identified as key industries required to register as accountable institutions with the Financial Intelligence Centre (FIC). All accounting firms that fall into this category must comply with this requirement. Therefore, it is essential for every accounting professional to determine whether their firm needs to register with the FIC.
To determine whether a firm should register, practitioners must analyse and evaluate their services against a specific set of criteria. If a firm meets any of the criteria defined for a Trust and Company Service Provider (TCSP), registration with the FIC is mandatory.
Those required to register with the FIC must not delay the process, as significant penalties may be imposed for non-compliance.
We urge all firms to carefully review the registration requirements and take immediate action to ensure compliance.
Join Lynette this June for a webinar about FIC:
- Click here for "Understanding Your Firms Obligations with the Financial Intelligence Centre" on June 18th.
- Click here for "How to Implement an RMCP in your Firm After Registering with the FIC on June 21st.