FIC warns against neglecting the risk of money laundering among small businesses

The Financial Intelligence Centre (FIC) has told the Standing Committee on Finance that financial sector role players should not assume that small businesses are low risk when it comes to money laundering.

This came up during virtual public hearings conducted by the committee, on proposed amendments to the Financial Intelligence Centre Act (FICA) which started on Tuesday.

The Standing Committee on Finance has warned that National Treasury will have to take responsibility if the October deadline of amending the Financial Intelligence Centre Act is not met. It says National Treasury delayed in submitting the proposed amendments.

In June, authorities warned the Committee that South Africa’s anti-money laundering legislative framework is lagging behind when compared with international standards. The amendments seek to tighten loopholes in the fight against money laundering and the financing of terrorist activities as well as to widen the scope of FICA.

Pieter Smit, the Executive Manager for Legal and Policy at the Financial Intelligence Centre, told the committee that the draft amendments would require compliance from both big and small businesses. This, after it was proposed that the new list of accountable institutions that have to comply with FICA be condensed.

“A lawyer that facilitates export transactions for institutions in the chemical industry, for instance, would be dealing with very high risk transactions, high risk customers, high risk geographic locations. The fact that it’s a small firm doesn’t reduce the risk of the business that it is dealing in,” says Smit explaining the importance of compliance by companies of all sizes.