Keep up to date on key Financial Services Regulation developments in South Africa during July 2022.
Draft public compliance communication no. 22A: Guidance on Information Processing
On 5 July 2022 the FIC published for comment the draft public compliance communication no. 22A (PCC 22A) – guidance on information processing in terms of FICA, in relation to data protection.
PCC 22A notes that in order for an accountable institution to comply with the obligations of FICA, it must obtain, process and further process certain necessary personal information and special personal information. PCC 22A states that FICA applies in a mutually non-conflicting manner to the principles of data privacy protection laws.
The personal information and special personal information an accountable institution obtains, uses and processes must be necessary to achieve the objectives of FICA. PCC 22A notes that the harmony between FICA and the Protection of Personal Information Act, 2014 (POPI) lies in the fact that the accountable institution only asks for personal information and special personal information that is necessary to achieve the purposes of FICA.
PCC 22A provides guidance on accountable institutions’ processes for establishing a business relationship or conducting a single transaction and complying with POPI.
The comment period on PCC 22A closed on 26 July 2022.
Directive for conduct within the national payment system on the Financial Action Task Force Recommendations for electronic fund transfers
The South African Reserve Bank published Directive 1 of 2022 on 15 July 2022 (Directive). Directive 1 of 2022 is issued in terms of section 43A(2) of FICA and sets out the conduct of accountable institutions relating to 'wire transfers' or electronic fund transfers as prescribed by the Financial Action Task Force (FATF) Recommendations.
The Directive cancels and replaces the 'Directive for conduct within the national payment system in respect of the Financial Action Task Force Recommendations for electronic funds transfers, Directive 1 of 2015'. The Directive becomes effective 30 business days from the date of publication.
The Directive applies to accountable institutions that facilitate or enable the origination or receipt of domestic and cross-border electronic funds transfers. The Directive also applies to domestic and cross-border electronic funds transfers initiated or processed through:
- immediate settlement payment clearing house (PCH);
- electronic funds transfer credit PCH;
- real-time clearing PCH;
- Society for Worldwide Interbank Financial Telecommunications (SWIFT) network;
- a credit, debit or prepaid card used to effect an electronic funds transfer; and
- any other arrangement, system and/or product that can initiate or process domestic and cross-border electronic funds transfers, as determined by the SARB from time to time.
The Directive does not apply to:
- a payment clearing house system operator as defined in the National Payment Systems Act (NPS Act);
- a settlement system as defined in the NPS Act;
- any transfer that flows from a transaction using a credit, debit or prepaid card for purchasing goods or services, as long as the credit, debit or prepaid card number accompanies all transfers flowing from the transaction. However, when a credit or debit or prepaid card is used to effect an electronic funds transfer, the transaction is covered by this directive;
- any transfers and settlements between financial institutions, where both the originator and the beneficiary are financial institutions acting on their own behalf; and
- electronic funds transfer debits.
The Directive requires an ordering financial institution to include specific information about the originator of a qualifying electronic funds transfer.
An accountable institution that falls under the Directive is required to submit an annual declaration to the National Payment System Department confirming the level of compliance of the systems and/or products and processes employed by that accountable institution. The compliance declaration should be submitted by no later than 31 March each year.
Enquiries about the Directive should be sent to
npsdirectives@resbank.co.za
Draft public compliance communication no. 115: Guidance on compliance measures aimed at combating proliferated financing
On 4 July 2022 the Financial Intelligence Centre (FIC) published for comment the draft public compliance communication no. 115 (PCC 115) in terms of the Financial Intelligence Centre Act, 2001 (FICA).
PCC 115 provides guidance to accountable institutions, reporting institutions and all other persons on the compliance measures aimed at combating proliferated financing.
FIC intends to conclude the consultation on this draft PCC 115 by publishing a final version no later than Wednesday, 31 August 2022. Queries can be directed to the compliance contact centre at the FIC.
Draft public compliance communication no. 117: Guidance on Item 3 of Schedule 1 (Estate Agents)
On 29 July 2022 the FICA published for comment the draft public compliance communication no. 117 (PCC 117) providing guidance on the interpretation of Item 3 of Schedule 1 of FICA. Item 3 of Schedule 1 of FICA includes estate agents as accountable institutions as defined in the Estate Agency Affairs Act, 1976.
The Estate Agency Affairs Act has been repealed and replaced by the Property Practitioners Act, 2019 with effect from 1 February 2022. PCC 117 notes that the reference to
"estate agent as defined in the Estate Agency Affairs Act" in Schedule 1 now includes
"property practitioners as defined in Property Practitioners Act". However, PCC 117 notes that this would be limited to persons who perform activities as defined in the now-repealed definition of estate agent.
Property practitioners who perform "estate agent" activities fall within the ambit of Item 3 of Schedule 1 of FICA and must register as accountable institutions with the FIC. PCC 117 explains that property practitioners do not automatically become accountable institutions unless the person performs an activity which is equivalent to that of an "estate agent".
Public comments are invited by 19 August 2022. Any questions or requests relating to draft PCC 117 may be sent to the FIC by emailing
consult@fic.gov.za
FSCA Communication 20 of 2022 - Publication of notice of draft amendments of the rules on proceedings of the office of the Ombud for financial services providers
On 6 July 2022 the Financial Sector Conduct Authority (FSCA) published draft amendments to the rules on proceedings of the office of the Ombud for financial services providers (Financial Advisory and Intermediary Services Act, 2002 (FAIS)) for comment.
The amendments propose increasing the current maximum compensation limit for the FAIS Ombud from ZAR 800,000 to ZAR 3,500,000
Interested parties are invited to submit comments on the draft amendment on the Comments Template published with the amendments on or before 19 August 2022 to
FSCA.RFDstandards@fsca.co.za
For more information find the
FSCA's Regulation Plan for 1 April 2022 to 31 March 2025 by
Nicolette va Vuuren
Webber Wentzel's Financial Services Round Up
- Transformation in the Financial sector
- Presented by
Safiyya Patel and
Zelda Swanepoel
-
The effect of the Employment Equity Amendment Bill on the Financial sector
- Presented by
Lizle Louw
-
Insights into legal liability for misleading climate communications
- Presented by
Maria Philippides and
Sarah McKenzie
-
Trends in ESG funding
- Presented by
Rashaad Carrim and
Natasha Pather
-
Data sharing in the era of POPI and the Cybercrimes Act
- Presented by
Karl Blom and
Wendy Tembedza
-
The Fintech Regulatory Framework and Legal Trends
- Presented by
Mieke Vlok
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What's happening with the move from JIBAR to ZARONIA
- Presented by
Khurshid Fazel and
Dawid de Villiers
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The impact of the Property Practitioners Act on financial institutions
- Presented by
Venashrie Mannar
The seminar was moderated by
Lerato Lamola-Oguntoye.
