On 23 July 2024, the Financial Intelligence Centre (FIC) issued a statement addressing the business sectors hindering South Africa’s removal from the grey list. The statement highlighted that the submission rate of the Risk and Compliance Return (RCR) questionnaire by legal practitioners stands at a mere 60%. The RCR questionnaire is designed to help businesses identify their exposure to money laundering and terrorist financing risks. On receipt, the FIC employs its Risk and Compliance Assessment Analysis tool to evaluate the RCRs, pinpointing higher risk designated non-financial businesses and professions. This assessment guides the FIC’s supervisory strategy, which includes inspections of high-risk entities.
To ensure that legal practitioners comply with the Financial Intelligence Centre Act 38 of 2001, the Law Society of South Africa (LSSA) has implemented several initiatives. These include hosting webinars, issuing advisories, and developing practical tools. These efforts are aimed at clarifying the profession’s role in combating money laundering and terrorist financing. The LSSA’s goal is to prevent South Africa from being grey listed. For years, the LSSA has engaged with the FIC, with the latest interaction culminating in a presentation by a high-level FIC team at the LSSA’s Conference and Annual General Meeting (AGM) in April 2024. During this meeting, the FIC emphasised the importance of compliance within the legal profession and shared relevant statistics with the delegates.
The LSSA views compliance as a crucial aspect of legal practice. Since the FIC’s presentation at the LSSA AGM, compliance rates have risen from 52% to 63%. Despite this improvement, the LSSA urges attorneys who have not yet submitted the RCR to do so promptly. Ensuring full compliance is essential for safeguarding the integrity of the legal profession and for contributing to South Africa’s efforts to exit the grey list.
Legal practitioners play a vital role in the fight against financial crimes, and their adherence to the Financial Intelligence Centre Act is critical. The LSSA’s proactive measures, including educational initiatives and ongoing collaboration with the FIC, demonstrate its commitment to fostering a culture of compliance within the legal community. The increased submission rate of RCR questionnaires is a positive sign, indicating that more legal practitioners are recognising the importance of their role in this global effort.
However, there is still work to be done. The LSSA continues to emphasise the necessity of full participation from all legal practitioners to meet compliance standards. By submitting the RCR questionnaires, legal professionals not only comply with the law but also contribute to a larger national and international effort to combat money laundering and terrorist financing.
The path to removing South Africa from the grey list requires collective action and responsibility. The legal sector’s participation is crucial in this regard. The LSSA’s ongoing efforts to support and educate its members about compliance will remain a key component in this mission. Legal practitioners are encouraged to prioritise their compliance obligations and submit the RCR questionnaires without delay, ensuring that South Africa can move closer to achieving its goal of exiting the grey list.
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This article was first published in De Rebus in 2024 (August) DR 3.
