FIC identifies SA business sectors delaying greylisting exit

South Africa's Financial Intelligence Centre is facing challenges in getting the country off the global greylist due to non-compliance issues within the legal and real estate sectors. In a recent interview with CNBC Africa, Christopher Malan, Executive Manager of Compliance & Prevention at the Financial Intelligence Centre, discussed the issues hindering South Africa's exit from the greylist. Malan emphasized that the non-compliance is not a criminal matter but rather a lack of adherence to regulatory requirements. Despite extensive outreach and awareness campaigns, some entities are willfully disregarding their obligations, prompting the imposition of administrative sanctions. Malan highlighted that entities failing to submit their reports face penalties starting at 50,000 rand, with the potential for escalation if compliance does not improve. The Financial Intelligence Centre aims to instill a sense of corporate responsibility and professionalism within these sectors to ensure timely compliance with regulations and secure the country's removal from the greylist. The ongoing non-compliance particularly plagues the legal and real estate sectors, which are deemed high risk by the Financial Intelligence Centre. Malan expressed concern over the sectors' lax attitude towards regulatory requirements and stressed the importance of receiving outstanding reports promptly to demonstrate a commitment to regulatory compliance. Despite efforts to enforce compliance, the Financial Intelligence Centre faces challenges in prompting behavioral change and full adherence to the Financial Intelligence Centre Act. Malan mentioned anecdotal evidence suggesting that some industry players adopt a 'deal with it when caught' mentality, indicating a lack of seriousness towards regulatory obligations. The Financial Intelligence Centre plans to collaborate with banks to notify them of clients' non-compliance, applying moral pressure alongside administrative sanctions to compel sectors to comply more meaningfully. The urgency to address these compliance issues arises from the impending assessment by the Financial Action Task Force in September, which will evaluate South Africa's progress in addressing the greylist concerns. While larger firms show better compliance rates, Malan underscored that compliance is a universal obligation across the industry. The involvement of regulatory bodies like the Legal Practice Council, the Law Society, the State Agents Affairs Board, and the Property Regulatory Authority should facilitate improved compliance within the legal and real estate sectors. The Financial Intelligence Centre aims to work closely with these bodies to expedite compliance efforts and enhance South Africa's standing in the international financial landscape. In conclusion, the Financial Intelligence Centre's proactive measures to address non-compliance issues within the legal and real estate sectors reflect a commitment to upholding regulatory standards and safeguarding South Africa's reputation. By enforcing administrative sanctions and fostering a culture of compliance, the Financial Intelligence Centre seeks to expedite the country's removal from the global greylist and reinforce the integrity of its financial system.