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Taxation & Regulation Analysis South Africa

Battling corruption, Fica keeps eye on SA's political elite

As always, the road to the elections poses a challenge for institutions responsible for enforcing Fica.
Source: Supplied. Hawken McEwan, director of compliance at DocFox.
Source: Supplied. Hawken McEwan, director of compliance at DocFox.

The political landscape is changing rapidly, making it tricky to spot and keep tabs on individuals in powerful public positions ( Peps) or close to them who could be tempted to engage in shady financial dealings or abuse their newly found public status.

New faces are emerging, alliances are shifting, and the stakes are high. Regulatory bodies need to be extra vigilant to identify a diverse range of individuals who might misuse their influence for personal gain during this critical period.

Vigilance amid political changes

The upcoming elections are putting pressure on institutions to follow Fica guidelines diligently. Getting it wrong not only risks the integrity of their business and the financial system but also undermines public trust in the rules in place to address corruption.

Accountable Institutions (AIs), those that have to comply with Fica, need to step up their game by training their staff continuously and improving their ability to spot potentially higher-risk individuals and activities.

Maintaining a list of politically exposed persons is extremely difficult in a changing landscape, but it serves a practical purpose by enabling firms to closely monitor individuals who might misuse public funds. By keeping a sharp eye on the activities of Pepss, firms can report anything suspicious, and regulators can swiftly act on any potential financial wrongdoing.

It’s important to note that this takes into account not only Peps themselves but also their family members and close associates who should undergo this additional scrutiny to prevent any attempts to circumvent the regulations by using the people around them to transact on their behalf.

How Fica helps address financial crime

In the fight against political corruption in South Africa, Fica plays a crucial role in combating financial crimes and protecting taxpayers’ funds. While Fica does not directly tackle corruption, the intelligence it gathers has been instrumental in supporting law-enforcement efforts.

Information shared by Fica has led to the recovery of over R5.8bn in criminal assets, showcasing its impact in fighting financial crimes and safeguarding public funds in the country.

As South Africa strives to strengthen institutions, uphold transparency, and escape the Financial Action Task Force’s greylist, monitoring politically exposed persons and their financial dealings is critical. By proactively investing in compliance tools and remaining vigilant during the election season, organisations can adeptly manage the complexities of overseeing these influential figures.

Watching Peps closely is vital to ensure a fair election process, prevent financial misconduct, protect public funds, and foster a transparent financial system for all.

To prepare for the elections, institutions must take proactive steps to enhance Fica compliance. Cultivating a culture of integrity and ethical conduct within organisations is essential for compliance and avoiding illicit financial practices.

About Hawken McEwan

Hawken McEwan is the director of compliance at DocFox.
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