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On 14 February, the FIC Financial Information Center warned that South Africa's removal from the Financial Action Task Force (FATF) gray list was in jeopardy due to breaches of reporting obligations, primarily by legal professionals and real estate agents. uttered. .
FIC Executive Manager Compliance and Prevention Christopher Mullan said two of the Financial Action Task Force’s 22 directives for South Africa are currently at risk of failure due to continued non-compliance by these two sectors. He pointed out that there was.
The directives in question are Directive 2A, which is a bit more technical, requiring the identification of high-risk entities, and Directive 2B, which requires the investigation of these entities. I think our listeners and readers know about the whole issue of South Africa being on the greylist. Many of them relate to money laundering and adequate protection to ensure better governance in South Africa and the world.
Read: SA marks 1 year on FATF gray list
Lawson Property Group issued a call to action on this issue in a media release last week, largely quoting its MD Tony Clark. He called on the real estate industry to address the situation.
In this latest episode of The Property Pod, SA's leading property investor podcast, Charmaine Trueter, Compliance Manager at Lawson Property Group, talks more about this issue.
Highlights of her interview appear below. You can also listen to the entire podcast above or download it on iono, Spotify, and Apple Podcasts.
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Charmaine, how bad is the situation? It is my understanding that for South Africa to be eligible to be removed from the gray list, the industry has until May this year to comply.
“Yes. It's very difficult to know how bad the situation really is. They said that only 43% of real estate practitioners and 50% of legal practitioners, including real estate agents, were filing RCRs. [risk and compliance returns] To FIC. But it's hard to really know what it is. ”
[real estate agency] Brands will no doubt require their franchisees, branches, and real estate agents to comply. It seems like there are some small independent bodies, probably in remote areas, that he just doesn't know about yet and he hasn't been informed about the FIC and doesn't know what its requirements and obligations are. So it's hard to say at this point. I'm pretty confident about Lawson – we've been working on it. ”
It seems like more bureaucracy for the real estate industry, but we have to deal with it. Where is the real estate sector falling short?
“Well, the Financial Intelligence Center has actually done amazing things. Their communication has been great and if you had signed up with them (which should have been back in 2016), but in 2017 they had a new platform. ) and they literally send us communications every week.”
“So [the FIC] They're really trying to get the word out and explain what the FIC's duties are. ”
“What's happening in the real estate industry is that we're so busy with our day-to-day jobs, trying to put bread on the table and earn an income, that we forget about it. I think some legal compliance is very important. Therefore, we fall short in the sense that we are not actually aware of our legal obligations under the Financial Information Center Act. ”
responsible institution
“We don’t understand that we are recognized as a responsible institution. [along] Therefore, you need to register with the FIC and have a compliance program in place. All customers must be identified and verified and any suspicious transactions or cash limit reports of any kind must be reported to his FIC. ”
“It's very troublesome, but it's also very, very important…”
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read:
Will SA be able to remove itself from the dreaded gray list by early 2025?
Impact of SA being placed on the FATF gray list
What are the risks and returns of compliance? [RCRs]• How cumbersome is it to file these forms and submit them to the FIC??
“Risk Compliance Returns Don’t Have to Be Onerous [terms of being] Difficult to complete. It's not difficult to complete. There are only 176 questions. This is a survey conducted on an online platform. They try to make it as easy as possible.
“The questions aren't difficult, but they can be a little vague. So it's just time-consuming, a little burdensome, and administratively cumbersome.”
“But there are a lot of resources on the FIC website. Also, Mr. Rebosa. [Real Estate Business Owners of SA] is involved, and as a brand, Lawson has provided extensive training and guidance to assist franchisees on how to complete these surveys.
“We can't do it for them, but we've definitely been trying to help them. Actually this week… [on Tuesday 27 February], FIC will be hosting a free webinar to educate agents who have not yet filled out compliance and RCRs. ”
listen:
Ministry of Finance explains why fiscal stability is key to growth
What progress has been made to remove SA from the greylist?
Impact of the Real Estate Business Act on the real estate industry
How is the group as Lawson dealing with this situation and do you believe the sector will comply by May?
“Well, I've been with Lawson for almost eight years, so since the beginning of 2015, we've pretty much complied with our FIC obligations and they've been very strict. As soon as we have any communication from the FIC, we send out group communications. We've set up infrastructure and templates and guidance notes; We've brought in legal experts as well, just to give our franchises proper webinar training on what our FIC obligations are.”
“So we've been working hard to get support from Lawson Brand Group with all the revenue and resources we have, and I think we've done a really good job.”
“My view is that we can get this done by May. Absolutely. We just need to unite the whole sector now…
“We could fill a gap where a brand like Lawson doesn’t exist, help small independent franchises, and give them the tools. That's the problem. Once you know what to do, all you have to do is do it. It's not difficult.”
Do you have any insight into what penalties or fines non-compliant companies in this area may face if they do not submit on time?
“Well, they say this is an administrative sanction and that can include financial penalties. When it comes to sanctions, the difficult thing is that they are proportional to the nature, severity and extent of the non-compliance. That's what it says.”
“Caution may be included. This may include a reprimand from the FIC, or it may include instructions for corrective action to authorities. This may include restricting or suspending business activities. There is therefore a very real threat of fines of up to R10 million for natural persons and R50 million for legal entities…”
Listen to the full episode here.
here.