FIC Act’s targeted financial sanctions obligations explained

The Financial Intelligence Centre (FIC) explains that all businesses listed as designated non-financial businesses and professions (DNFBP) in terms of the FIC Act must comply with their targeted financial sanctions (TFS) obligations.

DNFBPs include dealers in precious metals and stones, high-value good dealers, legal practitioners, certain property practitioners, trust and company service providers and gambling entities. 

TFS sanctions are aimed at preventing and suppressing terrorist financing and the financing of the proliferation of weapons of mass destruction. They include:

• Scrutinising client information against the TFS list on the FIC website to identify designated persons and entities.
• Freezing property belonging to identified persons and entities.
• Filing terrorist property and suspicious and unusual transaction reports with the FIC.
• Keeping records of these activities.

How to fulfil your business’s TFS obligations

Scrutinising client information against TFS list

DNFBPs must scrutinise information concerning clients against the TFS list at onboarding, when conducting transactions. The client information must also be scrutinised without delay and when the TFS list is updated. 

In addition, DNFBPs should scrutinise information concerning their clients against section 23 of the Protection of Constitutional Democracy Against Terrorism and Related Activities Amendment (POCDATARA) Act court orders information. The FIC will publish orders made in terms of section 23 of the POCDATARA Act on its website. 

The client’s information may include the person’s name, identification number, place of birth, address, date of birth, nationality, an entity’s name and other information. Other information may include the country of residence in the case of a natural person. 

Freezing property of designated person and entity

Where a DNFBP identifies a designated person or entity, it must immediately cease any activity in relation to that person, which is referred to as a “freeze”.

Where a prospective client, existing client, beneficial owner, person acting on behalf of a client, person on whose behalf the client is acting, or party to a client transaction, is designated on the TFS list, then the DNFBP must immediately freeze the property it has in its possession of that designated person. 

Filing terrorist property and suspicious and unusual transaction reports

Where there is a positive match against a TFS list, a DNFBP must immediately freeze the property linked to the designated person or entity and file a terrorist property report in terms of section 28A of the FIC Act. This must be done regardless of whether a transaction was concluded.

Where further transactions are attempted, the DNFBP must report subsequent actions. DNFBPs must report without delay to the FIC activity or transactions suspected of being linked to a client identified on the TFS list.   

Risk management and compliance programme

As part of their FIC Act compliance obligations, DNFBPs must develop and implement a risk management and compliance programme (RMCP). 

The RMCP provides for the manner in which the DNFBP will comply with the TFS obligations including the processes by which it will identify, assess, monitor, mitigate and manage terrorist financing and proliferation financing risks.

The FIC has issued public compliance communication 44A and a TFS manual which sets out guidance on the TFS obligations.  For more information and guidance, visit the FIC website or contact the FIC’s compliance contact centre on 012 641 6000 or log an online compliance query.

This article was sponsored by the FIC.