On 14 November 2022, the Money Laundering and Terrorist Financing Control Regulations, 2000 (Regulations) promulgated in terms of the Financial Intelligence Act, 2001 (FICA) will change the rules governing cash transaction reporting. On 21 October 2022, the Financial Intelligence Centre (FIC) published Guidance Note 5C which explains its requirements in relation to cash transaction reporting . This is a key issue in South Africa because cash has been identified as a key source of risk in relation to money laundering, terrorist and proliferation financing by the mutual evaluation done by the Financial Action Task Force on South Africa during October 2021.  Both accountable institutions (currently defined as including, for example, banks and other financial service providers, attorneys, trust administrators, estate agents, long-term insurers, casinos and foreign exchange dealers) and reportable institutions (also currently defined as motor dealers and dealers in Kruger Rands) (Institutions) have to report to the FIC all cash transactions (receipts and payments) which meet the thresholds specified in the Regulations. Currently any cash transaction of R24 999.99 or more or smaller transactions totalling R24 999.99 or more have to be reported to the FIC within 2 days of the Institution becoming aware of the transaction.  From 14 November 2022, the obligation to report applies to cash transactions of R49,999.99 or more, the aggregation provisions previously contained in regulation 24 no longer apply and the reporting period has been extended to 3 days.  Despite that, however, Guidance Note 5C recommends monitoring of all cash transactions, including those lower than the prescribed threshold and that where multiple cash transactions below the reporting threshold are completed by the same client, Institutions consider making a suspicious or unusual transaction report in terms of section 29 of FICA.  The FIC appears to have received loud and clear the message that cash is a key source of risk for South Africa. 

The amendments to regulation 22C now list the minimum information required for each cash threshold report.  This is an interesting change in direction by the FIC.  Since October 2017, FICA and its regulations replaced the original rule-based, check box approach to FICA’s “know your client” obligations with a risk-based approach.  The risk based approach requires Institutions to assess the anti-money laundering, terrorist and proliferation financing risk posed by each client and to decide what information is required to identify and verify the identity of that client based on the risk assessment. Despite the risk-based approach, the FIC now requires at least the information listed in the new regulation 22C in relation to all cash threshold reports and the source of much of that information. Guidance Note 5C distinguishes between “full particulars of” and relevant “information as is readily available”. The “full particulars” list is the information which each Institution is expected to have and must be provided. Guidance Note 5C describes information which is “readily available” as including information which an Institution may not have obtained in the course of identifying a client or conducting a transaction but goes on to say that “where it is commercial practice to obtain certain information in relation to clients, products, services and transactions” the information is considered to be readily available to the Institution and must be provided. “Readily available” information may not have been verified or confirmed when provided by but must nevertheless be provided to the FIC.

Guidance Note 5C also reminds Institutions that multiple cash threshold reports may be required where multiple Institutions become aware of the cash transaction such as where cash is paid into an attorney’s bank account, both the bank and the attorney will have to report the cash payment.

The FIC actively enforces cash threshold reporting and it is important to put processes in place to ensure that the reporting is done and done promptly.

The key changes are that:

1. cash transactions of R49 999.99 or more must be reported;
2. no aggregation provisions but beware as multiple transactions below the threshold may still trigger an obligation to make a suspicious or unusual transaction report;
3. must report within 3 days of becoming aware of the transaction;
4. must provide the prescribed information when making the cash threshold report.