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Key Obligations Under the FIC Act for Accountable Institutions

The FIC Act (38 of 2001) establishes mandatory requirements for all South African accountable institutions, including law firms, financial service providers, property practitioners, and dealers in high-value goods. Even experienced professionals can inadvertently miss obligations, which can result in penalties or regulatory scrutiny.

This article breaks down the critical obligations your institution must meet and shows how FICA Friendly helps integrate compliance seamlessly into your firm’s processes.

1. Customer Due Diligence (CDD)

What it is:

CDD requires firms to identify and verify client identities, assess risk, and determine beneficial ownership.

Practical guidance:

Verify official documents (IDs, passports, registration certificates)
Collect information on transaction purpose and source of funds
Update client risk profiles regularly

Problem solved: Without proper CDD, firms can be caught unaware during audits, leading to fines or frozen transactions.

2. Risk Management and Compliance Programme (RMCP)

What it is:

An RMCP defines how your institution manages risk and ensures compliance.

Components:

Policies and procedures tailored to your institution
Internal control structures for accountability
Mechanisms to monitor compliance effectiveness

Insight: Many institutions over-rely on templates, which can leave gaps. A well-designed RMCP integrates with your daily operations without overloading staff.

3. Reporting Obligations

Types of reports:

Suspicious Transaction Reports (STRs): File when criminal activity is suspected
Cash Threshold Reports (CTRs): Mandatory for large cash transactions
Risk Compliance Returns (RCRs): Annual report documenting your compliance program

Educational tip: Timely and accurate reporting is critical — regulators can impose substantial fines for errors or late submissions.

4. Sanctions and PEP Screening

Requirement: Screen all clients against:

National and international sanctions lists
Politically Exposed Persons (PEPs)
Adverse media

Why it matters: Missing a sanctioned client or PEP exposes your firm to legal, financial, and reputational consequences.

Practical tip: Use automated tools and cross-check periodically to ensure ongoing compliance.

5. Staff Training and Awareness

Focus:

Train staff to recognize suspicious transactions
Ensure consistent adherence to internal procedures
Maintain ongoing awareness of regulatory changes

Best practice: Make training part of regular team meetings or short refresher modules to embed compliance into everyday operations.

Extra value: Even a 2-minute self-assessment can identify where staff training gaps exist, giving leadership clarity on next steps.

Conclusion:

Compliance under the FIC Act is critical for protecting your firm from fines, audits, and reputational damage. Understanding CDD, RMCP, reporting, sanctions screening, and staff training ensures your firm operates safely and confidently.

Proactively addressing these obligations, even with small steps like a 2-minute self-audit, allows institutions to uncover hidden gaps, prevent costly mistakes, and maintain operational resilience.

Authored by FICA Friendly, a trusted compliance consultancy supporting South African law firms, financial service providers, property practitioners, and high-value goods dealers. We have worked with 30+ law firms, successfully guided clients through Risk Compliance Return submissions, and helped reduce sanctions — for example, lowering a R50,000 notice of non-compliance to R10,000.

Let us know what you think in the comments!