South Africa

Treasury calls for input on new anti-fraud regulations for agents

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Word "fraud" circled among financial data

The National Treasury is consulting on new anti-money laundering draft regulations in a bid to get South Africa off the Financial Action Task Force (FATF) grey list.

The draft regulations mostly deal with information sharing between accountable institutions – individuals or organisations carrying out any kind of business named in Schedule 1 of the Financial Intelligence Centre Act, which includes estate agents. As the Treasury states, financial criminals do not usually just target one institution, and so sharing information can help reveal patterns of suspicious activity in transactions across multiple institutions.

This is just the latest in a series of regulatory changes designed to crack down on financial crime that have affected the property industry. The government has already changed the rules on cash transaction reporting and cross-border payments.

What will the new regulations mean for estate and rental agencies?

The intention of the new rules, as spelled out in the National Treasury’s explanatory memorandum, is to make it easier for the Financial Intelligence Centre (FIC) to “follow the money”, reconstructing financial flows across multiple institutions. Making it easier for accountable institutions to share information would help them identify suspicious transactions to report to the FIC, but sharing customer information and transaction histories also raises concerns over privacy.

In the draft regulations, the National Treasury proposes some ways that these concerns could be overcome. These include the setup of a secure information-sharing platform, use of encryption and pseudonymisation to protect personal data, and a requirement that accountable institutions notify the FIC when they share information in this way, among others.

Whether they like it or not, property professionals are on the front line of South Africa’s fight against money laundering, terrorist financing and fraud. In the report that preceded South Africa’s greylisting, the FATF highlighted estate agents as high-risk due to the volume of money they handle and their “poor understanding” of their risks and obligations when it comes to financial crime. Engaging with the consultation and with the resulting information-sharing regulations will help reduce the threat of financial crime in the property sector.

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