Identifying and reporting suspicious behaviours and transactions

A guide recently compiled by Docfox discusses the importance of identifying and reporting suspicious behaviours and transactions. compares the Financial Intelligence Centre (FIC) to Batman in the world of combating money laundering and other financial crimes. The analogy is extended to Accountable Institutions, which need to step up to the role of Robin by reporting any suspicious behaviours or transactions to the FIC. 3Cube Property Solutions breaks down the role of Accountable Institutions and their obligations to the fight against crime.

First things first: what are the duties of Accountable Institutions

In terms of the FIC Act, Accountable Institutions are required to identify and verify new existing clients and keep records of their identities and all transactions entered into with them. The requirements for verifying new clients are exhaustive, and details such as the particulars of the employee or representative who obtained the information also need to be recorded.

The FIC Act stipulates that Accountable Institutions are required to report any behaviour or transactions that they view as suspicious. This includes cash transactions above the prescribed limit, property transactions associated with terrorism or related activities and any suspicious or unusual transactions. 

When do Cash Threshold Reports (CTRs) need to be submitted?

Any single cash transaction of R49 999 or more needs to be reported to the FIC. This needs to be done within three business days of when an employee or compliance offer becomes aware of the transaction. The reason for the concern around cash transactions relates to the virtually untraceable nature of cash. Without safeguards in place, criminals would have an easy way of removing illicit cash from their bank accounts and breaking the audit trail by using it in a different country or buying assets like cars, precious stones or expensive jewellery. This method is well-loved by money launderers and CTRs enable the FIC to blow the whistle on illegitimate transactions.

Reporting property associated with terrorism and related activities

If any accountable institution has knowledge (or even a suspicion) around assets that could be related to terrorism, they must report the matter to the FIC within five days. Submitting a Terrorist Property Report (TPR) timeously gives authorities time to attempt to stop the funds or assets before they reach their intended recipient.

Reporting suspicious and unusual transactions

Accountable institutions have 15 business days to report Suspicious Activity Reports (SARs) or Suspicious Transaction Reports (STRs). The clock starts ticking not when the suspicious activity takes place, but when your suspicion is aroused. That means that if you're looking through transactions from six months earlier and spot something suspicious, the 15-day window starts when you spot the suspicious transaction.

There are various aspects of a transaction that may raise suspicion: continuous persistence from a client that a transaction be carried out through less regulated digital assets is one example. Other examples would be transactions that are unusually large or unusually frequent, or clients who grow cagey when asked for identification or information.

The importance of confidentiality

When dealing with a transaction, a person or a company that seems suspicious, it is extremely important to be discreet. On the one hand, premature whistleblowing can give the people involved an opportunity to hide illicit funds or even hide themselves. On the other hand, if your suspicions prove to be unfounded, your relationship with the client could be negatively impacted.

Ensuring adherence to ethical business practices can be challenging and time-consuming, but finding the right premises for your business shouldn't be. Trust 3Cube Property Solutions to find your business the right setting in Cape Town or Gauteng. Contact us today for more information.