FICA Financial Intelligence Centre

Act

Agenda

• Functions of FICA

• Objectives of FICA

• What is a suspicious transaction ?

• How to report a suspicious transaction?

• Penalty for non-compliance

Global Overview

• Rapid growth in organised crime and money laundering

• Legislation dealing with these challenges:– Prevention of Organised Crime Act– Financial Intelligence Centre Act

• Role Financial Action Task Force

Objective of FICA

• Complements Prevention of Organised Crime Act

• Introduces measures aimed at preventing money laundering activities.– Financial Intelligence Centre– Money laundering Advisory Council

• The regulatory regime encourages compliance and self-regulation by institutions

Financial Intelligence Centre

• Not an Investigative Body• FIC Functions:

– Collect, Process, Analyse and Interpret Information obtained

– Inform, Advise and Co-Operate with Investigating authorities

– Supervise Compliance, and give guidance to institutions to combat money laundering activities.

Money Laundering Advisory Council

• Advisory Body to the Minister of Finance

• Forum in which Gov and Private sector can consult on policies and measures to combat money laundering activities.

Accountable Institutions

• FICA provides a list of accountable institutions that may be exploited for money laundering purposes– Long-Term Insurers– Brokers– Attorneys– Banks

Money Laundering v Fraud

• Money Laundering is a process that hides the illicit nature or source of the funds.

• Fraud aims at putting Charter Life at a disadvantage financially.

• The aim of FICA is to trail the proceeds of organised crime

Obligatory Duties

• FICA came into force in February 2001

• Regulations of the Act were passed in December 2002, most of them are effective on 30th June 2003.

• Duty to Report Suspicious or Unusual Transactions is effective from 3rd February 2003.

Obligatory Duties

• Duty to Identify and Verify new and existing Clients

• Duty to Keep Records

• Duty to Report

• Duty to Train Staff

• Maintain Internal rules

Workshop: Objective

• Proper understanding of Your reporting obligations regarding Suspicious or Unusual Transactions

• Follow up sessions will be held on the remaining duties.

What , When and How

• What is a suspicious transaction ?

• When does a person have knowledge of a suspicious transaction ?

• When must a person report such a transaction ?

• How must the transaction be reported ?

What is a Suspicious Transactions ?

• The receipt of the proceeds of an unlawful transaction

• A transaction which:- facilitates the transfer of the proceeds of an unlawful

transaction- there is no apparent business or lawful reason for the

transaction- the purpose is to avoid the “reporting duty” under

FICA- the transaction may be relevant to the investigation of

an evasion of a tax duty

When do you have knowledge ?

• If you:

- have actual knowledge of the fact; or

- there is a reasonable possibility of the existence of that fact

- and the person fails to obtain information to confirm or refute the existence of the fact

What is the time frame in which the report

must be made ?

15 days from the time the suspicion arouse

How to test for reasonableness?

• Test of a reasonable person • Would a reasonable person having,

– general knowledge, skill, training and experience that a person in his position could reasonably be expected to have , or

– general knowledge, skill, training and experience that the person in fact has.

Examples

• Large investment, given the profile of the client

• Multiple policies – all cancelled within a 30-day cooling period

• Third party payments during the 30-day cooling off period or of early surrenders

Examples

• Debit order details cancelled, and payments subsequently made through M65 cash deposits

• Unemployed person using a third party’s bank account for large investments.

• Incorrect debit order details, necessitating a refund

Examples

• Inactive bank accounts receiving policy benefits or refunds

• Fraudulent ID documents

Tipping Off

• It is an offence to inform the suspect or any other person (including colleagues) other than in terms of Charter’s policy and Internal Rules that a report is to be submitted to the FIC

How do you report the transaction ?

• Staff members must report suspicious transactions on the FICA Register available on the Compliance web page

• When in doubt escalate the matter to your team leader.

• If you still need assistance then contact the Compliance Department :– Sid Kaplan– Anita Gopal

FICA Register

• Compliance Homepage

• http://intranet.charterlife.co.za/ComplianceHomepage/FICARegister.html

• Team Leaders have security to log a suspicion and view respective team members’ transactions

Click on the new Compliance Home Page

 

          You are now on the Compliance Homepage.          Use the scroll bar on your right hand of the screen in order to see the link to the Register           Click on the FICA Register to “Capture a Transaction”.

Capture TransactionPolicy Number

Owner Name

Life Insured

Identity number or D.O.B.

Issue Date (ddmmyyyy)

Policy / Product Type

Premium Payor

Premium in Rands (R0.00)

Premium amount in words

Premium Frequency: Single/Annual/Monthly

(Please enter either S or A or M)Transaction Date (ddmmyyyy)

Value of policy @ the date of transaction

Any Charter Life policy owned by the client ?

If yes

Policy number

Cessionary

Clients address or contact details

Description of transaction including reasons why it may besuspicious or unusual and what drew your attention to this

Your Name & Surname

Your telephone number

Your e-mail address

Submit

What if the transaction is above board ?

• If there is a reasonable explanation which puts to rest any suspicions, then these reasons must be recorded .

• The record must be kept in the file and on AW .• The record is important as evidence in the event

that FIC picks up a trend with other Accountable institutions on the same client and comes back to Charter Life for an explanation .

Protection of Staff Members

• Staff members reporting suspicious transactions are protected from civil or criminal proceedings

• Internal rules must be easily accessible by all employees.

Training

• Charter Life is obliged to train employees to ensure:- compliance with FICA- compliance with Internal Rules

• Collective duty of compliance on ALL employees of Charter Life

Penalties

• Range from 15 years imprisonment and or R10m fine – failure to report a suspicious transaction,– tipping off

• 5 years imprisonment and or R1m fine – failure to submit a report,– draft internal rules or– failure to provide training