Frequently Asked Questions

You are an Accountable Institution if the professional services you provide bring you within the definition as stated in paragraph 12 or paragraph 2 of schedule 1 to the Act (annexure A to the Guide): this means that you provide financial advice as defined in the FAIS Act.
If you provide one of a number of services in relation to Trusts and it features as a core function of your business, you could also be regarded as an Accountable Institution. You need to read PCC 2 with this definition if you are in doubt whether you qualify as Accountable Institution, or not. This document is available on the IRBA website.

Q: When do I need to register with the FIC?

A: You only register with the FIC if you are an Accountable Institution. As a RA, it is unlikely and not advisable, to register your firm with the FIC as the whole firm is then subject to the obligations in terms of FICA. Therefore, if you for instance have a separate legal entity such as a Close Corporation or a Company which falls within the definition of an Accountable Institution, you will only register that entity with the FIC.

Q: What are my obligations towards my audit clients who are Accountable Institutions or Reporting Institutions?

A: Firstly, you need to understand the definition in order to identify your clients and their obligations. Your main clientele will include Attorneys, Estate Agents, Brokers and Car Dealers. Attorneys, Brokers and Estate Agents are regulated by respectively the Law Society, FSB and Estate Agency Affairs Board, in similar fashion as what the IRBA regulates RA's. Therefore, their Regulators are to ensure compliance in their respective professions. However, as their auditor, you must ensure that they are registered with the FIC as Accountable Institutions or Reporting Institutions and that they comply with their reporting obligations in terms of section 28 of FICA. It is also advisable to recommend to them to keep record of any reports made to the FIC.

Q: What about my clients who are not audit clients, such as Close Corporations?

A: Although you do not have the same obligations for reporting in terms of section 45 of the APA (Reportable Irregularity procedure) you still need to be alert to criminal activity which could resort within the confines of other legislation and which you, as a registered professional, could be expected to report. Remember that non-reporting is a punishable offence and you could also expose yourself to the risk of being charged as accomplice for not reporting money laundering where you are aware of it.

Q: I already registered with the FIC although I now realise I am not an Accountable Institution- what do I do?

A: Send your log-on details and provide the reason why you want to deregister, to the IRBA's inspections department and they will assist you to de-register with the FIC.

Q: I serve as a Trustee on a number of Trusts: do I need to register or do I need to register my Firm as Accountable Institution?

A: Read the PCC 6, it is unlikely that you will meet the definition only by virtue of the fact that you serve as a Trustee. Should you, though, need to register as Accountable Institution, it is advisable not to register the whole firm as all files will then have to be processed according to the requirements of FICA.

Q: Am I or my firm a Reporting Institution?

A: No, a Reporting institution is defined in the schedule to FICA (Annexure A to the Guide), and at this stage only includes a Dealer in motor vehicles, or a Dealer in Kruger Rands.

Q: I don't deal with cash and I know my clients: why does the IRBA Guide apply to me?

A: The revised and updated Guide has been expanded to include discussions on other aspects of compliance outside FICA: this means, on the one hand, that your Regulator requires of you to have minimum standards in place, and on the other hand, that you could be exposed to criminal activities should you be ignorant about the implications of money laundering. Taking a decision based on not handling cash or having efficient KYC procedures is a good start but you also need to be aware of the relevance of the Guide and implement it within your firm. The criminal penalties are onerous for anyone found guilty for not complying with the relevant Laws.

Q: Will the IRBA only conduct inspections on anti-money laundering at firms who are Accountable Institutions?

A: No, all RA's who are subject to inspections, will in future also be inspected for compliance with anti-money laundering legislation: this means that, at a minimum, the firm must have implemented the IRBA Guide on Combatting Money Laundering and Financing of Terrorism.

Q: My staff gets trained via an external consultant who also ensures that the audit procedures are regularly updated, including awareness around Fraud: surely that is sufficient?

A: The awareness around detecting Fraud or other criminal activities is a good foundation but the IRBA requires developing an alertness within your Firm around possible risks of money laundering activities. You can incorporate the FIC guideline, currently incorporated as annexure C to the IRBA Guide, to raise awareness amongst your staff around transactions or actions by clients which could indicate money laundering.

Q: I am not an Accountable Institution but I want to ensure that my firm is not exposed to the risk of money laundering: from an anti-money laundering perspective, what should I focus on?

A: It goes without saying that you should always maintain your Professional Scepticism even with long-standing clients, and in audit, you always adhere to the standards set by the ISA's as these apply to your type of business. However, the FATF (Financial Action Task Force) recommends strict Due Diligence procedures and for you that would include the "Know your Client", or "Take-on" procedures. The IRBA website has a guideline by the FATF, written for the benefit of accountants, which could assist you in improving your risk-based approach in this area.

Q: If I report in terms of Section 29 of FICA, will I have to testify in Court?

A: You can testify if you so prefer, but section 38 of FICA states that you will not be compelled to do so, where the report was made in good faith.

Q: What is my exposure to civil litigation if I report a client?

A: Section 38 of FICA protects you against civil or criminal action where the report was made in good faith, so a client will not be able to take action against you for having made the report.

Q: Does the R25 000 reporting obligation for an Accountable or Reporting Institution apply to receiving or paying the amount?

A: The obligation to report applies to either receiving or paying the amount. Refer to PCC5 on the clarification of section 28A reporting, available on the IRBA website.

Q: Who is the FATF and why do I need to take note of their guidelines?

A: After the terrorist attacks in the US on 11 Sept 2001, the OECD (Organisation for Economic Co-operation and Development) directed the formation of the Financial Action Task Force, which currently comprises of 36 members including South Africa. They set the benchmark worldwide for the guidelines and legislation for combatting money laundering and financing of terrorism. They conduct regular visits in South Africa where various Government Bodies need to report on their implementation of the Legislation as it applies within their jurisdiction. The IRBA as supervisory body of the Auditing profession, reports in similar fashion on its compliance obligations.