| 2.1 | The obligation under section 29 of the FIC Act to report a transaction arises when a person knows of certain facts, on the one hand, or in circumstances in which a person ought reasonably to have known or suspected that certain facts exist, on the other. This means that a person associated with a business, as described above, must report his or her knowledge or suspicion to the Centre whenever: |
| • | he or she becomes aware of something, or |
| • | circumstances arise in which a person can reasonably be expected to be aware of something, or |
| • | circumstances arise in which a person can reasonably be expected to suspect something. |
| 2.2 | Section 29(1) of the FIC Act describes the "something" referred to above. This can relate to situations concerning the business itself or concerning transactions to which the business is a party. Situations relating to the business itself are that the business: |
has received the proceeds of unlawful activities, or it is about to receive such proceeds,
| • | has received property which is connected to an offence relating to the financing of terrorist activities, or it is about to receive such property, |
| • | has been used in some way for money laundering purposes, or it is about to be used for money laundering purposes, or |
| • | has been used in some way to facilitate an offence relating to the financing of terrorist activities, or it is about to be used for this purpose. |
| 2.3 | These do not have to relate to any particular transactions involving the business. Instead they relate more to the way in which the affairs of a business are conducted. These include, for example, instances where the business is used as a front to disguise the movement of proceeds of unlawful activities, or where the facilities of a business (such as its bank accounts) are being used to facilitate the transfer of proceeds of unlawful activities. |
| 2.4 | The situations concerning transactions to which the business is a party relate to transactions between the business in question and its customers and the customers' motives for engaging in those transactions. These can relate to a particular transaction or to a series of transactions. These are situations where a person is aware or· suspects that a transaction or series of transactions with the business: |
| • | facilitated the transfer of the proceeds of unlawful activity or is likely to do so, |
| • | facilitated the transfer of property which is connected to an offence relating to the financing of terrorist activities or is likely to do so, |
| • | does not appear to have a business purpose, |
| • | does not appear to have a lawful purpose, |
| • | may be relevant to the investigation of the evasion of any tax administered by the South African Revenue Service, or |
| • | somehow relates to an offence relating to the financing of terrorist activities. |
| 2.5 | The FIC Act defines "proceeds of unlawful activity" and "unlawful activity" by reference to the definitions of the same terms in the POCA. Thus the term "proceeds of unlawful activity" for the purposes of the FIC Act means: |
| • | any property or any service, advantage, benefit or reward; |
| • | which was derived, received or retained: |
| o | in South Africa or elsewhere, |
| o | at any time before or after the commencement of POCA, |
| • | in connection with or as a result of any unlawful activity carried on by any person. |
| 2.6 | The term "unlawful activity" means any conduct, which constitutes a crime or which contravenes any law whether such conduct occurred in the Republic or elsewhere. |
| 2.7 | It is important to note that Section 29 of the FIG Act refers to reports being made in connection with the proceeds of unlawful activities and money laundering or terror financing offences as opposed to criminal activity in general. The FIG Act therefore does not require reports to be made on suspected crimes or unlawful conduct by a person (apart from money laundering and terror financing activities). |
This may best be explained by means of an example:
A stolen or fraudulent cheque is presented for payment to a bank. This action constitutes an element of a fraud, namely a misrepresentation that the person presenting the cheque is the legitimate holder of the cheque and is entitled to receive the amount reflected on the cheque. The presentation of the cheque is therefore part of an action to commit an offence, namely fraud. As a result this transaction should be reported to the appropriate investigating authorities as a fraud or attempted fraud. However, if the stolen or fraudulent cheque is honoured, the funds collected as a result would constitute the proceeds of the fraud. Any subsequent transaction involving those funds would be a transaction relating to the proceeds of unlawful activities and possibly a money laundering transaction which would fall within the scope of section 29 of the FIC Act.
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