Alert to all employers - FICA vetting of employees working in finance (Directive 8)

South Africa was recently deemed “investment risk” and placed on a grey listing that has raised the awareness of money laundering and corruption.?This is a negative outlook for the economy and all investors has started to withdraw from South Africa.?As part of the IMF’s requirements, South Africa needs to show that several steps are taken to eliminate and address corruption and money-laundering.?Part of that effort is set out by the FIC in terms of the below – to which each business having a finance department, a lawyer, an estate agent, etc. must comply.

We are drawing your attention to the Directive released by the Financial Intelligence Centre (“FIC”) on 31 March 2023, outlining that every employer and / or accountable business must ensure that periodic vetting is conducted on current and prospective employees in accordance with their competencies and integrity in the form of a risk-based manner as well as ensure that a financial vetting process is followed in which the Business ensures that no employee is listed on the financial targeted listing e.g. found guilty of fraud, money laundering, financial terrorism funding, etc.

The aim is to identify possible or potentially exposed employees that could be or has been involved in money laundering, terrorist funding or financing or proliferation financing.?It is required that all institutions that works with finance, clients’ finances and / or financial institutions must have policies and standards in place that monitors, controls and assess any mitigation or preventative measures to these.

All accountable institutions must comply with the FIC guidelines as published and / or be able to demonstrate compliance with relevant obligations under the FICA equivalent regulations.

The risk-based assessment for employees, include a role assessment with levels of authority and power delegation to which high risk positions must be flagged and monitored with quarterly assessments and checks.

The directive has been released on 31 March 2023 and there is no transitional period, which in turn mean that all compliance is with immediate effect.?Failure to comply or where companies are found to fall short of the requirements, can be fined up to R50 million.

Employment law and PoPIA must be implemented immediately in order to ensure that contractual coverage is provided to the businesses in terms of the vetting and risk assessment management.?Where a contract fails to mention or warn an employee of these terms and vetting, it could lead to challenges at the dispute resolution forums.

Contact us urgently to assist with the vetting, policies, and contractual correctness.?We support your business with PoPIA implementations.