Financial crime has traditionally been a significant problem in South Africa. Issues such as fraud and corruption are regularly reported in the media, and there are many cases which go unreported, which points to the fact that we are not fully aware of the true extent of the problem, says Chris van der Walt, founder of eas-e Fica.
In order to curb some aspects of this, government launched the Financial Intelligence Centre Act (FICA) and established the Financial Intelligence Centre (FIC). While the act does prevent a lot of financial crime, we are not aware of the true extent of the problem. Chris van der Walt, founder of eas-e Fica, says that one must be careful when reporting on such matters.
“One must be careful not to overstate the extent of financial crime, especially when the proceeds of a particular crime are later laundered, as this could lead to double accounting. I recall hearing at a FIC seminar earlier this year that the value of cases referred to law enforcement agencies exceeded R74 billion during 2012/13, up by some R68 billion on the previous period,” says van der Walt.
Decreasing the FICA compliance headache
FICA provides additional requirements that companies need to comply with in order to remain accredited financial services providers. This can become a headache as the requirements are extensive and are changing as technology becomes more prominent in the industry.
Van der Walt points out that the purpose of establishing eas-e Fica was to decrease this headache and to assist companies with most of their FICA related needs.
“We don’t view regulatory compliance as an end in itself. To us, there must be a substantive purpose served. Helping our clients to avoid fines and stay out of trouble with the regulator is a by-product of our service. The big thing for us, however, is to demonstrate how compliance processes and controls help our clients not to become victims of financial crimes themselves. This requires little more than connecting information received during the client acceptance processes with that used to finalise compliance standards,” says Van Der Walt.
He adds that the company’s emphasis is therefore to assist our clients by performing the entire client acceptance procedure for them on an outsourced basis, from the so-called Know-Your Client, to screening for terrorists and other undesirable persons, maintaining the information by re-verifying it regularly, providing training and assessments online and reviewing clients’ internal processes regularly.
Tackling a global problem for local companies
The issue of terrorism is becoming a serious threat globally, and the fact that terrorist organisations and activities could be bankrolled by financial crime is a significant risk factor for companies. Reducing this risk factor is fast becoming a key focal area for companies and van der Walt points out that eas-e Fica assists significantly in this regard.
“Meeting compliance obligations by screening for this and recognising the value that information has for our own businesses, empowers us to detect possible threats early, without being paranoid about them, and act accordingly. Based on our experience thus far, this is one of the most neglected aspects in anti-money laundering and crime prevention compliance except for some of the larger institutions. Our offering brings this aspect well within the reach of every accountable institution, including the recently published requirement for institutions to take a ’single client view‘ says van der Walt.
This also goes beyond the primary function of the know-your-client process, which van der Walt warns is only one of a few steps which need to be taken in order to achieve full protection. “Meeting all requirements is regarded as a cost to business and the allocation of resources is generally directly proportional to the threat of a fine. By showing our clients how the information obtained could be valuable to them beyond their expectation, their attitude towards compliance changes and by making use of systems to automate many of the requirements, we make compliance affordable to most,” concludes van der Walt.
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