Proposed amendments to the Financial Intelligence Centre Act (FICA) must ensure a lesser regulatory burden on small businesses, according to SA Institute of Charted Accountants (SAICA) Project Director Juanita Steenekamp. This week, the changes to the law, which aims to curb money-laundering activities in the financial sector, were discussed at a Parliamentary meeting by the Standing Committee on Finance.
In her presentation, Steenekamp pointed out that it would be financially and structurally impossible for an SMME to comply with the regulatory burdens imposed on them by the Act. She also said some issues need clarification, and that the costs of compliance were not taken into consideration. “When you register with the Financial Intelligence Centre, there are certain compliance obligations that small practitioners have to complete,” she said.
“These small practitioners will now have to spend money on regulatory measures like onboarding, certain validations and reporting certain transactions. “Our members as accountants already have a code of professional conduct, and through the code, they are obligated to report on non-compliance, but (the proposed amendments) would be new and would take time and (money) to implement,” she said. Steenekamp recommended lesser regulatory requirements such as transaction value or other similar mechanisms be used to manage the SMMEs’ risk in dealing with various financial transactions that occur through their practices.
However, the Financial Intelligence Centre’s Executive Manager for Legal and Policy, Pieter Smit, said that the amendments would require compliance from both big and small businesses. “We should not make the mistake to assume that a small business only deals in low-risk customers, as that is not necessarily true,” he warned. Smit also noted that the current scope, of the Act, already included a large number of small businesses such as those in the legal sector, and they too were obligated to comply with the measures.
“The burden of compliance an institution needs to take is a function of the type of business it is in, the type of service it provides and the type of customer it chooses to deal with,” he said. “For example, a lawyer that facilitates export transactions for institutions in the chemical industry would be dealing with very high-risk transactions, high-risk customers, (and) high-risk geographic locations. “The fact that it is a small firm does not reduce the risk of the business that it is dealing in.”