The Financial Intelligence Centre Act (FIC Act), 38 of 2001, forms the bedrock of South Africa’s legislative framework designed to combat money laundering (AML), terrorist financing (CFT), and the financing of proliferation activities. For entities designated as “accountable institutions” (AIs), compliance is a non-negotiable legal obligation aimed at monitoring and mitigating illicit financial flows. The increasing digitization of financial services mandates that the FIC Act’s requirements must be integrated directly into the design and operation of all public-facing websites and associated back-end systems.
1.1 The FIC Act’s Expanded Reach in the Digital Economy
Websites and digital platforms operated by accountable institutions are now primary channels for initiating business relationships and transactions. AIs are explicitly identified by the FIC as being vulnerable to exploitation by criminals.
The definition of an Accountable Institution, formalized under Schedule 1 of the FIC Act, encompasses diverse entities, including traditional financial providers like banks, insurers, and credit providers, alongside non-traditional actors such as estate agents, legal practitioners, and the increasingly significant Crypto Asset Service Providers (CASPs). For all these entities, their website serves as a critical point of transaction and client interaction.
Digital platforms inherently facilitate Non-Face-to-Face (NFTF) transactions. These transactions carry an elevated inherent risk compared to physical interactions, primarily due to the speed, potential anonymity, and complex cross-jurisdictional nature of web-based engagement. Consequently, the website interface acts as the initial risk entry point that requires robust mitigation controls. Regulatory bodies, including the Financial Intelligence Centre (FIC), have published extensive guidance necessary to support the seamless implementation of the FIC Act requirements within these digital financial services environments.
The continuous amendment of the FIC Act, driven by global Financial Action Task Force (FATF) standards and evolving local financial crime trends, directly influences technological requirements. The inclusion of new sectors, particularly CASPs, demonstrates the FIC’s efforts to proactively close technical loopholes exploited by digital criminals. Since digital platforms amplify transactional speed and potential anonymity, the regulator is functionally mandating stringent, technology-based controls—such as biometric verification—for NFTF interaction. This makes advanced electronic Know Your Customer (eKYC) software a necessary component for operating a compliant digital platform.
1.2 The Risk-Based Approach (RBA) as the Digital Architectural Foundation
All compliance obligations under the FIC Act must be premised upon the mandatory Risk-Based Approach (RBA). This requires AIs to possess a thorough understanding of how their specific products, services, and digital distribution channels—i.e., the website—can be abused for money laundering or terrorist financing, and what corresponding controls are necessary to mitigate those risks.
The inherent NFTF risks associated with digital channels generally necessitate a higher level of scrutiny for web-based client onboarding, making Enhanced Due Diligence (EDD) procedures a common requirement, particularly when certain risk indicators are triggered.
The website’s back-end architecture must be designed to dynamically assess and mitigate risk based on factors defined within the AI’s RBA framework. This includes assessing the geographic location of the client, potentially determined via IP address or declared address data; the nature and volume of transactions permitted; the payment methods facilitated (especially cash-linked services, which pose higher risk); and the complexity of the client entity structure being onboarded digitally.
The application of the RBA ensures that the website’s client journey adapts based on the perceived risk. If the RBA defines specific high-risk parameters, such as a client based in a sanctioned country or a transaction exceeding a certain monetary threshold, the website’s system must apply immediate, corresponding controls, such as automatically requiring Enhanced Due Diligence steps or blocking the transaction altogether. This effectively translates the compliance team’s risk document into a functional System Requirements Document (SRD) for AML/CFT controls, directly shaping the digital user experience (UX) and system logic.
II. Establishing the Foundation: Governance and the Digital RMCP
Operational compliance for any FICA-regulated website is fundamentally derived from the AI’s internal governance structure, primarily formalized through the Risk Management and Compliance Programme (RMCP).
2.1 Registration and Mandated Digital Roles
Accountable Institutions must establish a clear, auditable link with the regulator. The first mandatory step is registration with the FIC via the dedicated goAML registration platform.
Beyond organizational registration, the AI must appoint a Compliance Officer (CO) and, potentially, one or more Money Laundering Reporting Officers (MLROs). The CO and MLRO hold specific regulatory responsibility for the online platform. The CO must ensure that the institutional details submitted via the website are accurately captured and maintained on the FIC’s system, and that all regulatory reports generated from website activity are successfully filed. Structurally, the CO must be the first person to register on goAML on behalf of the AI and holds the authority to approve all subsequent MLRO registrations.
2.2 The Digital Risk Management and Compliance Programme (RMCP)
The RMCP is a mandatory, comprehensive document detailing the procedures an AI must undertake to achieve and maintain compliance with the FIC Act. For digital platforms, the RMCP is the architectural blueprint for the website’s client-facing interaction points and back-end processing systems.
The RMCP must contain specific mandatory components that translate directly into digital functionality, generally categorized into three parts :
2.2.1 Part 1 – Identification and Assessment of Risk
The website’s core functionality must allow for the capture of data points necessary to assess client risk profile. This includes gathering essential information such as the client’s source of funds or wealth, their occupation, and their geographic location. This data must feed directly into an automated internal risk rating system. This initial assessment dictates the subsequent level of verification required during onboarding.
2.2.2 Part 2 – Mitigation and Management of Risks
This section validates the website’s controls implemented to manage identified risks. Crucially, this defines the specific Customer Due Diligence (CDD) methods applied (e.g., whether basic or enhanced measures, like biometric verification, are triggered based on the risk rating), the logic governing automated reporting triggers (e.g., transaction thresholds), and the detailed protocols governing the secure data handling and record-keeping processes implemented by the system infrastructure.
2.2.3 Part 3 – Monitoring and Review
The RMCP must define the mechanisms by which the AI monitors the adequacy and effectiveness of its digital controls. This involves establishing procedures for reviewing internal audit trails, analyzing false-positive rates generated by automated screening tools, and confirming that the systems remain effective in mitigating ML/TF risks.
2.2.4 RMCP Maintenance and Global Considerations
The RMCP is explicitly not a static document; it requires continuous review and updates whenever regulations change or the business’s digital landscape evolves. The system architecture must be flexible enough to facilitate regular updates to compliance parameters—such as changes in sanction lists or risk scoring models—without necessitating fundamental overhauls of core compliance logic.
For accountable institutions utilizing their website to offer services internationally, the RMCP must address potential jurisdictional conflicts. If the digital platform serves clients in a foreign country, the AI is obligated to confirm whether that host country’s laws permit the implementation of FICA-mandated measures (e.g., sharing identity data with South African systems or implementing specific CDD steps). If compliance measures are prohibited by the foreign jurisdiction, the AI must formally inform the FIC and the relevant supervisory body. This requirement imposes an initial layer of complexity on digital onboarding flows, mandating sophisticated geo-location and regulatory jurisdiction checks at the point of digital client access.
III. Core Website Implementation: Digital Customer Due Diligence (CDD/KYC)
The successful execution of Customer Due Diligence (CDD), or Know Your Customer (KYC), is the most technically demanding FICA requirement for any accountable institution’s website. It requires moving beyond simple static document collection towards sophisticated, technology-driven eKYC to manage the elevated risks of Non-Face-to-Face (NFTF) engagement.
3.1 Non-Face-to-Face (NFTF) Verification and Technology Mandate
Given the anonymity inherent in digital interactions, financial institutions must implement robust frameworks that scrutinize transactions and customer behavior over time. The inherent risk dictates that Enhanced Due Diligence (EDD) procedures should be applied to NFTF clients. While copies of documents (faxed, scanned, or emailed) may theoretically be accepted, they require the AI to take additional, verifiable steps to confirm their authenticity and ownership to the client in question. This requirement functionally makes advanced digital verification technology indispensable for modern FICA compliance.
Recent administrative sanctions against major institutions underscore the inadequacy of relying solely on scanned documents for NFTF transactions. Deficiencies in core obligations, such as verification of identity, address, and beneficial ownership, have resulted in massive penalties, reinforcing that regulators expect the use of automated, authoritative eKYC services to prove identity integrity.
3.2 Robust Digital Identity Verification (IDV) Mechanisms
To mitigate fraud and ensure compliance, digital identity verification must employ a multi-layered approach, combining at least two independent checks to achieve a high assurance of identity, aligning with good FICA and KYC practice.
3.2.1 Biometric and Liveness Verification
Biometric technology forms the cornerstone of digital FICA compliance. The website, or associated mobile application, must integrate advanced biometric mechanisms capable of :
- ID Document Capture: Automated reading, data extraction, and verification of official documents such as the Smart ID card or passport.
- Liveness Check: Implementing true biometric liveness checks to ensure the individual presenting the identity is physically present during the onboarding session and is not a spoof (e.g., a photo, video, or deepfake).
- Facial Match: Utilizing facial recognition algorithms to accurately compare the live selfie taken during onboarding against the photo extracted from the official identity document.
3.2.2 Authoritative Data Triangulation
Verification must not rely solely on documents but must be cross-matched against authoritative, trusted third-party data sources, such as public or credit bureau records. For South African residents, this process must include triangulating the captured biometrics and extracted data against records held by issuing authorities, notably the Department of Home Affairs (DHA). This instant validation (often completed in minutes) confirms the client’s authenticity, bypassing the risk associated with potentially fraudulent static documents. The verification system must maintain a complete and auditable trail of this process.
3.3 Proof of Address (POA) Verification in the Digital Context
The website system must securely capture and verify the client’s physical residential address, as required for both natural and juristic persons.
3.3.1 Acceptable Digital Collection
The AI must provide functionality for the secure, encrypted upload of acceptable POA documents. These include standard items such as recent utility bills (municipal water, lights), bank statements, municipal rates invoices, or active lease agreements.
3.3.2 Handling FICA Exceptions
The digital platform must be capable of processing specific FICA exceptions that require specialized declarations. This necessitates sophisticated digital forms for:
- Co-habitant Declarations: The system must accept a declaration from a co-habitant (e.g., spouse, parent, homeowner), requiring the declaration to capture the co-habitant’s full names, identity number, and the relationship, accompanied by proof of address in the co-habitant’s name.
- Employer Declarations: For employees residing on the employer’s property, the system must accept a formal declaration from the employer, accompanied by proof of the employer’s physical business address.
- Security: FICA-Compliant infrastructure with AES-256 Encryption.
To enhance compliance certainty for NFTF clients, digital verification systems should actively validate the address data submitted against third-party datasets or utility provider records, functioning as a necessary data source check.
3.4 Verification of Juristic Entities and Beneficial Ownership
Onboarding corporate clients via a website requires a specialized module architected to handle complex entity structures and the mandate for identifying Beneficial Ownership (BO).
3.4.1 Entity Information Collection
The digital onboarding workflow for juristic entities must collect comprehensive identifying information, including the registered name, registration number, registered and operational addresses, and contact details. The system must also identify and verify the identity of the person who exercises executive control over the company (e.g., Managing Director or CEO).
3.4.2 Beneficial Ownership (BO) and Authority
The system must meticulously identify and verify the natural person(s) who ultimately own or control the legal entity. Failure to adequately perform this identification of beneficial owners constitutes a significant and specific sanctionable offence under the FIC Act.
Furthermore, when an individual (such as a trustee, director, or mandated representative) establishes a relationship or transacts on the entity’s behalf, the AI must verify both the identity of the representative and their legal authority to act on behalf of the entity. Documentary evidence, such as a resolution, power of attorney, or letter of authority, must be collected and verified digitally.
The practical implementation of rigorous CDD relies on gathering data from “multiple sources”. This necessary depth of verification results in a significant technical challenge: the compliant digital KYC process requires integrating at least three distinct data verification API streams—identity verification (DHA/biometric), POA verification (credit bureau/utility data), and juristic entity data (company registers). The website’s back-end must be engineered to manage these complex API orchestrations, ensuring rapid data aggregation, high availability, and secure data mapping across disparate service providers.
IV. Proactive Risk Mitigation: Ongoing Monitoring and Screening
FICA compliance is continuous. The accountable institution’s operational systems must implement automated, perpetual monitoring of clients and transactions against known financial crime indicators.
4.1 Mandatory Screening Obligations
The AI must implement automated processes for screening client profiles both during the initial onboarding process and on an ongoing, continuous basis throughout the business relationship.
4.1.1 Targeted Financial Sanctions (TFS) Screening
Screening against Targeted Financial Sanctions (TFS) lists is a non-discretionary, mandatory obligation under Sections 26A, 26B, and 26C of the FIC Act.
The system architecture must integrate with specialist screening lists (often provided via API by third-party compliance firms ) that mirror the UN Security Council (UNSC) consolidated list of proscribed persons and entities. The FIC maintains and updates this list on its own platform, with a mandate to update it within 24 hours of changes made by the UNSC. Given this time-sensitive regulatory exposure and the criminal liability associated with transacting with a sanctioned person, AIs cannot rely on monthly batch screening; they must implement technical solutions that check client data against feeds updated in near real-time (daily or more frequently).
If the screening system identifies a match between a client or entity and an entry on the TFS list, the AI must immediately freeze any assets held and refrain from proceeding with any transaction. Non-compliance with TFS obligations constitutes a serious criminal offence.
4.1.2 Politically Exposed Persons (PEPs) Management
The website’s risk systems must determine if clients are Domestic PEPs (DPEPs) or Foreign PEPs (FPEPs), which are defined in the FIC Act. PEP data must include family members and close associates.
Identification of a client as a PEP serves as an automated trigger for mandatory Enhanced Due Diligence (EDD), necessitating a higher level of scrutiny. This EDD frequently requires senior management approval for the client relationship and mandates continuous monitoring for the duration of the relationship. Screening systems must effectively identify and track these high-risk profiles to ensure regulatory adherence.
4.2 Continuous Transaction Monitoring Systems (CTMS)
Ongoing due diligence requires the AI’s operational systems to actively monitor transactional data against the customer profile.
The Continuous Transaction Monitoring System (CTMS) utilizes advanced technology, often incorporating artificial intelligence (AI) and machine learning (ML), to track and analyze transactional behaviors. The purpose is to ensure that these behaviors are consistent with the client’s expected profile—which includes their occupation, stated purpose of the relationship, and declared source of funds—all gathered during the initial CDD.
The CTMS must be robustly engineered to detect and flag deviations or “digital red flags” in transaction patterns. These flags generate internal alerts that require the MLRO to investigate potential suspicious activity and potentially file a Suspicious Transaction Report (STR). The monitoring process also ensures that client identification, beneficial ownership, and risk profile information—all collected and verified during onboarding—are continuously reassessed and updated throughout the relationship.
A critical consideration is that if the initial KYC/CDD data collection is flawed—for instance, if an existing high-risk client (like a PEP) is mistakenly onboarded as low-risk due to inadequate digital verification—the CTMS will be compromised. A successful risk rating scheme is necessary for the CTMS to apply appropriate scrutiny. When the foundational data is incorrect, the CTMS fails to apply the necessary EDD, leading directly to a failure in ongoing monitoring and exposing the AI to potential administrative sanctions.
V. Technical Compliance: Secure Data Handling and the FICA-POPIA Nexus
The data collected during FICA-mandated CDD—which includes identity documents, biometrics, and financial records—constitutes highly sensitive personal information. Managing this data necessitates simultaneous adherence to two major legislative acts: the FIC Act (mandate to collect) and the Protection of Personal Information Act (POPIA) (mandate to protect).
5.1 Navigating the Regulatory Interplay
While the FIC Act compels the collection and verification of Personal Information (PI), POPIA gives effect to the constitutional right to privacy by providing safeguards for the collection, storage, processing, and securing of this information.
The FIC has clarified that the two acts operate in a “mutually non-conflicting manner”. FICA provides the legal justification for processing the data, especially when applying the principle of proportionality inherent in the risk-based approach. However, POPIA dictates the technical and organizational security standards by which that FICA data must be secured and managed.
5.2 Secure Data Collection and Transmission (Data in Transit)
Accountable institutions must implement robust security protocols to protect PI transferred during digital interactions. This includes using high-grade encryption (e.g., TLS 1.2 or higher) for all data in transit—covering identity images, biometric data streams, and personal details—to prevent interception during transmission.
Furthermore, when AIs rely on external KYC providers for digital verification services, they must ensure these third parties meet stringent security standards (such as SOC2 compliance or an equivalent robust standard). This is crucial because, under POPIA, both the AI (the Responsible Party) and the third-party provider (the Operator) share certain responsibilities for safeguarding the personal information.
5.3 Data Storage, Integrity, and Confidentiality (Data at Rest)
The storage of FICA records must adhere to POPIA’s eight conditions, specifically focusing on the condition related to “Security Safeguards”.
5.3.1 Mandatory Encryption and Access Control
FICA records, including identity documents and verification reports, must be stored in secure, centralized databases that implement mandatory, robust encryption for all data at rest. This encryption ensures that data remains confidential even in the event of unauthorized access to the storage system. The system must also enforce strong Role-Based Access Controls (RBAC) to limit employee access strictly to data required for their compliance functions.
5.3.2 Immutability and Auditability
The FIC Act imposes a stringent requirement that records may not be amended or destroyed without authorization from the responsible person. This anti-tampering mandate sets a high bar for data integrity, surpassing standard POPIA safeguards.
To comply with the non-amendment rule, AIs must implement systems that utilize non-repudiation logging or technologies capable of immutable logging (e.g., cryptographic hashing). This technical measure ensures that an unalterable audit trail is maintained, recording who accessed or processed FICA data and preventing back-dating or alteration of client identity and transaction records—a critical feature for forensic compliance inspections.
5.4 Record Retention and Destruction Lifecycle Management
The FIC Act requires that records be maintained for the prescribed period, typically five years after the business relationship has ended, solely for the purpose of combating financial crime.
The system architecture must incorporate an auditable process for data lifecycle management. Once the mandatory FICA retention period lapses, the personal information collected may no longer be used for FICA purposes. At this point, the system must trigger a process for the secure deletion or de-identification of the personal data, in strict compliance with POPIA’s requirements for responsible destruction.
VI. Mandatory Reporting Protocols via goAML Integration
The website’s operational systems must be designed to generate and transmit mandated regulatory reports to the FIC. This requires seamless integration with the FIC’s proprietary electronic platform, goAML.
6.1 goAML Platform and Access
The Financial Intelligence Centre strictly mandates that all regulatory reports must be submitted in the prescribed format and timeframes exclusively via its dedicated electronic goAML platform (https://goweb.fic.gov.za/goAMLWeb_PRD). Reports submitted outside this mechanism are not accepted.
Successful access and submission require that the accountable institution, the Compliance Officer, and all Money Laundering Reporting Officers (MLROs) are properly registered and approved by the FIC.
6.2 Regulatory Reports Generated by Website Activity
The website’s operational data must feed into systems capable of identifying and preparing two primary types of transactional reports:
6.2.1 Suspicious Transaction and Activity Reports (STRs/UTRs)
The Continuous Transaction Monitoring System (CTMS), discussed in Section IV, acts as the internal flagging mechanism. When a transaction or activity is deemed suspicious by the MLRO following internal investigation, the report must be filed as an STR or Unusual Transaction Report (UTR).
While goAML allows for web-based submission, high-volume AIs are strongly compelled by regulatory time constraints to pursue system-to-system integration, utilizing XML formats, to ensure rapid compliance. Failure to submit these reports within the prescribed timeframes constitutes a finding of non-compliance.
6.2.2 Cash Threshold Reports (CTRs)
Accountable and reporting institutions must file a Cash Threshold Report (CTR) for any physical cash payment (notes, coins, or travellers’ cheques) that is received from or paid out to a client, if the amount equals or exceeds R50,000 (i.e., more than R49,999.99).
Even for digital AIs, the website’s accounting systems must automatically track and aggregate any physical cash component of transactions to generate the required data. This data must be prepared for submission via the goAML web reports interface, following detailed user guides published by the FIC.
6.3 Technical Requirements for System Integration
The legal mandate for timely reporting forces high-transaction volume AIs to prioritize robust API or XML integration with goAML. This requires a dedicated internal middleware layer capable of transforming internal data structures into the precise XML schema defined by the FIC for bulk submissions.
A critical technical requirement involves adherence to stringent digital formatting rules. Reports must adhere to strict capitalization guidelines (e.g., the first letter of words must be capitalized, but typing words in ALL CAPITAL LETTERS is disallowed). Failure to comply with these digital format standards, or failure to meet prescribed timeframes, results in a finding of non-compliance. This technical hurdle of accurate XML transformation constitutes a compliance bottleneck that necessitates specialist API gateway management.
VII. Ensuring Compliance Maturity: Auditing and Consequences
FICA compliance is defined by the FIC Act as a continuous process, requiring consistent internal vigilance and a clear understanding of the severe administrative and criminal penalties for systemic failure in the digital environment.
7.1 Internal Monitoring and Auditing of Digital Controls
The RMCP obligates the AI to conduct continuous monitoring and efficacy testing to ensure that automated digital controls—such as biometric liveness detection, sanctions screening frequency, and CTMS alerts—are functioning as designed and effectively mitigating risks.
AIs must ensure that their systems are established to maintain an “auditable trail” and provide “sufficient and proper systems in place” for FICA verification. This process includes regular quality reviews of the risk management system and performing specialized analysis of risk data. Comprehensive FICA training is compulsory for all employees interacting with the digital systems, covering AML procedures, digital fraud indicators, and the strict internal handling of KYC data under the FICA/POPIA nexus.
7.2 Administrative Sanctions and Penalties for Digital Failures
Compliance enforcement is overseen by the South African Reserve Bank Prudential Authority (PA), which conducts inspections and imposes significant administrative sanctions for non-compliance.
7.2.1 Severity of Non-Compliance
The consequences of non-compliance are severe, including financial penalties up to R10 million for natural persons and R50 million for legal persons, alongside potential imprisonment. Recent enforcement actions, such as administrative sanctions totaling R56.25 million against a major South African bank, demonstrate the regulator’s commitment to imposing massive financial penalties for systemic breaches.
7.2.2 Key Sanctionable Digital Failures
Analysis of administrative sanctions reveals that failures are often systemic and linked directly to deficiencies in the website’s core functionality :
- CDD and EDD Failures: Failing to adequately conduct or document Customer Due Diligence and Enhanced Due Diligence for digital clients.
- Verification Deficiencies: Systemic failure in the robust verification of client identity, physical address, source of funds, and beneficial ownership.
- Inadequate Screening: Insufficient Politically Exposed Person (PEP) screening and poor ongoing due diligence for high-risk profiles.
- Reporting Failures: Non-submission or late submission of mandatory reports (STRs/CTRs/RCRs) or submitting them in an incorrect format.
It is essential to recognize that administrative sanctions are typically imposed not for isolated clerical errors, but for systemic failures across multiple compliance steps. A flaw in the website’s initial verification layer (e.g., poor biometric liveness detection) inevitably leads to a cascade of subsequent non-compliance findings (failed CDD, failed PEP screening, failed ongoing monitoring). Regulators aggregate these failures, resulting in compounded financial penalties. This regulatory mechanism necessitates zero-tolerance security standards in the website’s initial verification layer.
VIII. Conclusion: A Roadmap for Sustained Digital FICA Adherence
FICA compliance for a South African accountable institution’s website is a mandate for embedding robust anti-money laundering and counter-terrorist financing controls directly into the digital operating model. Compliance cannot be treated as a secondary IT requirement but must be defined as a mission-critical, continuous process driven by the Risk-Based Approach (RBA).
Achieving and maintaining FICA-compliant digital operations requires four strategic investments:
- Automated Governance Implementation: The Risk Management and Compliance Programme (RMCP) must be fully operationalized, translating legal risk parameters directly into automated software rules engines that dictate digital workflow, client risk scoring, and the requisite level of digital due diligence (CDD/EDD).
- Authoritative eKYC Integration: To mitigate the high risk of Non-Face-to-Face (NFTF) interactions, systems must employ multi-layered eKYC solutions, including mandatory biometric liveness checks and real-time data triangulation against authoritative databases like the Department of Home Affairs. This moves compliance assurance beyond documents to verifiable, dynamic identity integrity.
- Secure Nexus Management: Strict adherence to the overlapping FICA and POPIA requirements must guide data handling. This necessitates strong data governance, including mandatory encryption for all data in transit and at rest, alongside technical implementation of immutable logging to satisfy FICA’s anti-tampering mandate.
- Seamless Regulatory Reporting: The website’s back-end must facilitate reliable, automated data transformation layers to generate accurate XML submissions for Suspicious Transaction Reports (STRs) and Cash Threshold Reports (CTRs) to the goAML platform, ensuring compliance with strict reporting deadlines and formatting rules.
Given the significant legal exposure, including penalties up to R50 million, accountable institutions operating digital platforms must prioritize achieving compliance maturity, where technological systems are designed to proactively detect, mitigate, and accurately report financial crime risks with minimal reliance on fallible manual intervention.
IX. Frequently Asked Questions (FAQs)
Q1: What is the core purpose of FICA compliance for a South African website?
The core purpose is to identify and prevent the proceeds from unlawful activities, such as money laundering, terrorist funding, and tax evasion, from passing through South African financial systems. Compliance requires embedding robust anti-money laundering (AML) and counter-terrorist financing (CFT) controls directly into the website’s digital operations.
Q2: Which organizations must comply with FICA regarding their websites?
Compliance applies to all entities designated as “accountable institutions” under Schedule 1 of the FIC Act. This broad list includes banks, insurers, credit providers, estate agents, legal practitioners, and Crypto Asset Service Providers (CASPs), among others.
Q3: What is the mandatory Risk-Based Approach (RBA), and how does it affect the website’s design?
The RBA requires an Accountable Institution (AI) to understand how its products and digital distribution channels could be used for financial crime and to implement controls that mitigate those specific risks. The website’s architecture must dynamically apply varying degrees of Customer Due Diligence (CDD) and verification based on the client’s risk profile and transaction type.
Q4: What specific digital checks are required for Customer Due Diligence (CDD) in a Non-Face-to-Face (NFTF) setting?
NFTF verification requires a multi-layered approach combining at least two independent checks. This typically includes biometric verification (such as face match and liveness checks) , and cross-matching client data against authoritative third-party data sources like the Department of Home Affairs (DHA). This is necessary to achieve high assurance of identity integrity.
Q5: How must a website handle screening against Targeted Financial Sanctions (TFS) and Politically Exposed Persons (PEPs)?
The system must screen clients both during onboarding and continuously against the FIC’s TFS list (mirroring the UNSC consolidated list) to ensure no transactions proceed with sanctioned persons. Screening for PEPs (and related persons) is mandatory , with identification of a PEP automatically triggering the requirement for mandatory Enhanced Due Diligence (EDD).
Q6: How do the FIC Act and POPIA intersect regarding client data?
The FIC Act mandates the collection of personal information for AML/CFT purposes, while the Protection of Personal Information Act (POPIA) dictates how that data must be secured, stored, and protected. The FIC has stated that the two acts operate in a “mutually non-conflicting manner,” with FICA providing the legal justification for processing and POPIA setting the necessary, high security standards.
Q7: What are the technical requirements for submitting regulatory reports to the FIC?
All mandatory reports, including Suspicious Transaction Reports (STRs) and Cash Threshold Reports (CTRs), must be submitted electronically via the FIC’s dedicated goAML platform. CTRs are specifically required for cash transactions that equal or exceed R50,000 (i.e., more than R49,999.99). The system must adhere to strict data formatting rules for successful submission.
Q8: What is the penalty for FICA non-compliance related to digital systems?
Non-compliance can result in severe administrative sanctions, including financial penalties up to R10 million for natural persons and R50 million for legal persons. Penalties are often imposed for systemic failures, such as inadequate customer due diligence (CDD), failed verification of identity or beneficial ownership, and the non-submission of mandatory reports.
