Financial Intelligence Centre Act, 2001 (Act No. 38 of 2001)NoticesGuidance to Financial Services Industries regulated by the Financial Services Board concerning the meaning of the word "Transaction"Guidance Note 21. Introduction |
Guidance Note 2
Money Laundering is criminalised in section 4 of the Prevention of Organised Crime Act, 1998. The money laundering offence can be described as the performing of any act which may result in concealing the nature of the proceeds of crime or of enabling a person to avoid prosecution or in the diminishing of such proceeds.
Apart from criminalising the activities constituting money laundering, South African law also contains a number of control measures aimed at facilitating the detection and investigation of money laundering. These control measures, as contained in the Act, are based on three basic principles of money laundering detection and investigation i.e. that:
| • | intermediaries to the financial system must know with whom they are doing business, |
| • | the paper trail of transactions through the financial system must be preserved, and |
| • | possible money laundering transactions must be brought to the attention of investigating authorities. |
The control measures introduced by the Act include requirements for institutions to establish and verify the identities of their clients, to keep certain records, to report certain information and to implement measures that will assist them in complying with the Act.
The majority of obligations under the Act apply to "accountable institutions". These are institutions which fall within any one of the categories of institutions listed in Schedule 1 to the Act. This Guidance Note is aimed at those accountable institutions that are referred to in items 4, 5, 8, 11, 12, 15, 17 and 18 of Schedule 1 to the Act.
The Act also established the Financial Intelligence Centre as the agency responsible for the collection, analysis and disclosure of information to assist in the detection, prevention and deterrence of money laundering in South Africa. The Act empowers the Centre to provide guidance in relation to a number of matters.
This Guidance Note provides general guidelines which the relevant accountable institutions may apply in order to interpret the term "transaction" in relation to each institution’s obligations to identify and verify the identities of its clients. It is not the purpose of this Guidance Note to provide a complete definition of the term which could be applied rigidly across all sectors of the financial services industry. This Guidance Note is not legal advice and is not intended to replace the Act and Money Laundering Control Regulations ("the Regulations") issued under the Act in December 2002.