FIC: Guidance Note 7A

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FIC: Guidance Note 7A

• 18 February 2025
• Regulatory Compliance and Legislation
• South African Accounting Academy

Summary:

The Financial Intelligence Centre (FIC) has published Guidance Note 7A (GN 7A) which offers accountable institutions guidance on compliance with the Risk Management and Compliance Programme (RMCP) requirements provided for in section 42 of the Financial Intelligence Centre Act, 2001 (FICA).

Article:

This Guidance Note has been published to provide guidance that will be required to support accountable institutions on the implementation of the FICA.

The FICA incorporates a risk-based approach to compliance elements such as customer due diligence (CDD) into the regulatory framework. A risk-based approach requires accountable institutions to understand their exposure to money laundering and terrorist financing risks. By understanding and managing their money laundering and terrorist financing risks, accountable institutions not only protect and maintain the integrity of their businesses but also contribute to the integrity of the South African financial system.

GN 7A replaces Chapter 4 of Guidance Note 7, specifically, about the Risk Management and Compliance Programme (RMCP).

Chapter 4 has been updated to provide further guidance to boards of directors, senior management or other person or group of persons exercising the highest level of authority in an accountable institution, who must approve the RMCP of their accountable institution.

The updated Chapter 4 of GN 7A also provides guidance regarding the documentation describing the RMCP.

Contents:

• Preface
• Introduction
• CHAPTER 1 Adoption of a Risk-based approach
  • General Principles
  • Risk assessment and Understanding of Risk
  • Risk Mitigation
• CHAPTER 2 Customer Due Diligence Measures
• CHAPTER 3 Recordkeeping
• CHAPTER 4 Risk Management and Compliance Programme (RMCP)
• CHAPTER 5 Implementation of the United Nations Security
• Council Resolutions relating to the Freezing of Assets
• Glossary

This Guidance Note was developed in collaboration with the National Treasury, South African Reserve Bank and Financial Sector Conduct Authority.

Click here to download the 78-page Guidance Note:

https://www.fic.gov.za/wp-content/uploads/2025/02/2025.2-GN-implementation-of-fic-act.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• The Financial Intelligence Centre Act (FICA) is yet another piece of legislation that your clients must comply with, and which you must assess compliance with.  If they don’t comply with the relevant laws and regulations, you have certain reporting obligations in terms of NOCLAR (NOn-Compliance with Laws And Regulations) – this could include reporting to management, qualifying your audit opinion, reporting a Reportable Irregularity, etc.
• As an auditor and independent reviewer, you need to consider amendments, regulations, guidance and directives that are gazetted relating to FIC and accountable institutions, to ensure that your clients (or even your own practice) comply with their reporting obligations.

Relevance to Your Clients:

• Relevant entities (specifically accountable institutions) have a duty to comply with the FIC Act, otherwise they could be held liable.
• Relevant entities should be aware of amendments, regulations, guidance and directives that are gazetted relating to FIC and accountable institutions, to ensure that they comply with their reporting obligations.

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