PPRA & FIC: Property Practitioners’ obligation to report Suspicious and Unusual Transactions to FIC

PPRA & FIC: Property Practitioners’ obligation to report Suspicious and Unusual Transactions to FIC

• 04 July 2024
• Regulatory Compliance and Legislation
• South African Accounting Academy

The investment in property provides a stable, high- value and secure asset, which makes this sector particularly vulnerable to money laundering (ML). Non-financial institutions additionally are vulnerable to terrorist financing (TF) and should always be aware of potential terrorist financing risk. To add to the risk of criminal exploitation, property transactions by their nature allows for the integration of illicit funds into the legal economy, while allowing for criminals to derive an income from their investment and allows for camouflaging of the origin of the illicit proceeds through sale of the property or through rental income of a property.

It is therefore important for property practitioners to be vigilant against potential criminal abuse and report suspicious and unusual transactions and behaviour to the Financial Intelligence Centre (FIC). This is in line with their Financial Intelligence Centre Act (FIC Act) obligations which are geared towards combating ML and TF.

In September 2023, the FIC issued Public compliance communication 56 (PCC 56) which provides specific guidance for property practitioners available for download at https://www.fic.gov.za/wp-content/uploads/2023/09/2022.11-PCC-PCC-56-Interpretation-of-property-practitioner.pdf

The following is discussed in detail in the reminder:

• Suspicious Transaction Reporting obligation
  • Property practitioners, as accountable institutions, must file regulatory reports on suspicious and unusual transactions and activities (STRs and SARs).
• Targeted Financial Sanctions
  • Scrutinising client information
  • Freezing of property
• Risk and compliance return

Click here to access the FIC reminder for download:

https://theppra.org.za/download.php?data_id=135937

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.
• As an auditor and independent reviewer, you need to consider and assess compliance with the PPA and relevant publications issued by the PPRA.
• As an accountant, you may need to advise your clients who are property practitioners on compliance with the PPA and adherence to the latest guidelines and notifications issued by the PPRA.

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.
• Your clients who are property practitioners, must adhere to the latest guidelines and notifications issued by the PPRA.

0 COMMENTS

LEAVE A COMMENT