New FIAU Implementing Procedures – Sanctions Screening

Finally, the FIAU has published the long-awaited new Implementing Procedures after launching the consultation document in late October 2018.

To many, and quite rightly, when the consultation document was published, it was a big surprise that the document completely ignored any reference to sanctions. Rightly so one question that emerged was: ‘Can we therefore completely ignore the issue of sanctions?’. It was a fair question since the ‘old’ Implementing Procedures (section 3.7), was very clear about this – the FIAU expected Subject Persons to retain a record of sanction searches made. Strangely enough the Consultation document was completely silent on this matter.

Then towards the end of November, the Finance Ministry, published a Guidance paper that explained the obligations of the Subject Persons in terms of the National Interest (Enabling Powers) Limited. The puzzle was solved. The regulatory body vis-à-vis international sanctions is not the FIAU but the Sanctions Monitoring Board. In fact, section 4.11 of the newly published FIAU Implementing Procedures states that:

…the obligations emanating from the National Interest (Enabling Powers) Act relating to sanctions screening, freezing of assets and reporting. This Act also provides for the constitution of the Sanctions Monitoring Board (“SMB”), which is the national competent authority responsible to monitor the implementation of, and ensure compliance with, targeted financial sanctions.

Obligations of Subject Persons

And this brings us to the question of ‘What are the obligations of Subject Persons in terms of the National Interest (Enabling Powers) Act?’  There are various obligations but section 17 (1) (6) needs to be highlighted:

Any legal or natural person conducting a relevant activity or relevant financial business as defined in the Prevention of Money Laundering Act shall be required to:

(a) regularly check the list of designations by the United Nations, the European Union, and the Board, and to screen their client databases against those lists on a regular basis and immediately after a change to any of these lists occurs;

(b) have in place and effectively implement internal controls and procedures to ensure compliance with the obligations arising from this Act and any relevant United Nations or European Union Resolutions or regulation

Obviously, there are fines applicable for non-adherence to such legislation.

The FIAU announced (section 4.11 of the Implementing Procedures), that a Memorandum of Understanding (MoU) has been signed with the Sanctions Monitoring Board, and in terms of this MoU, the FIAU is assisting the Sanctions Monitoring Board in its monitoring compliance. In simple words, when you are targeted for an on-site (or even possibly it could be an off -site) compliance visit the simple questions asked by the FIAU would be:
(i) Show us how you are screening your clients against EU and UN sanctions
(ii) Show us how you are monitoring these sanctions against your client database.

How InScope helps you stay compliant

If you are an InScope client, the answers to the above questions would be extremely simple to answer since InScope is fully complaint with the National Interest (Enabling Powers) Act. In fact, when a new client (or even a beneficial owner) is on-boarded there is instant screening against both UN and EU sanctions. The monitoring is then made daily (normally at 3.00 am), so that if there are any positive hits, you will immediately receive a warning as you open your InScope dashboard when you apply the first clicks on your laptop while still sipping your first coffee at the office.

The cost of all this? It comes completely free with the InScope AML-CFT Software. The reason being is that the InScope AML-CFT software is not just about sanction screening. More than that as it is a very powerful and feature-rich tool for managing the risk based AML-CFT risks.

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