Instruction Number 01/2023 for Specified Businesses (South Africa) (2023-03-13)

Summary

This GFSC Instruction (Number 01/2023), issued under Section 49AA(6) of the Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law, 1999, responds to FATF adding South Africa to its increased monitoring list and South Africa's removal from Appendix C (Equivalent Jurisdictions) of the Handbook. It requires specified businesses to reassess risk and remediate customer due diligence for existing South African business relationships that relied on CDD concessions.

• Identify affected relationships: By 31 December 2023, identify all business relationships where reliance was placed on paragraph 6 or 10 of Schedule 3 concessions (Appendix C businesses, intermediary relationships, or introduced business) because the introducer, intermediary or Appendix C business is South African.
• Reliable introductions: For relationships relying on an introducer under paragraph 10, ensure full CDD measures under paragraph 4 of Schedule 3 are met.
• Appendix C businesses: For customers previously treated under section 9.6 simplified CDD as regulated South African AML/CFT businesses, ensure verification measures under paragraph 4 of Schedule 3 are met.
• Intermediary relationships: Where an intermediary was treated as the customer, either meet correspondent relationship requirements (paragraph 5(1)(b) and section 8.6) or apply full CDD to each of the intermediary's underlying customers.
• Notify if remediation fails: Notify the Commission if unable to remediate an identified relationship by 31 December 2023, detailing additional risk controls applied.
• Review risk assessments: By 31 December 2023, review relationship risk assessments for all business relationships where South Africa is a relevant risk factor and apply mitigating measures if risk has increased.

Where CDD ultimately cannot be completed, the specified business should terminate the relationship in accordance with paragraph 9 of Schedule 3 and section 4.7 of the Handbook, and consider a disclosure to the Financial Intelligence Unit. The Commission states it will review compliance through on-site inspections and other supervisory means.

Key obligations

• By 31 December 2023, identify all existing business relationships relying on paragraph 6 or 10 Schedule 3 concessions linked to South African introducers, intermediaries, or Appendix C businesses
• Apply full customer due diligence measures under paragraph 4 of Schedule 3 to identified relationships that used reliable introducer arrangements
• Apply verification measures under paragraph 4 of Schedule 3 to identified relationships treated under Appendix C simplified due diligence
• For intermediary relationships, either satisfy correspondent relationship requirements or apply full CDD to each underlying customer of the intermediary
• Notify the Commission by 31 December 2023 if a business relationship cannot be remediated, detailing additional risk controls applied
• Review relationship risk assessments by 31 December 2023 for all relationships where South Africa is a relevant risk factor and apply mitigating measures where risk has increased
• Where CDD cannot be completed, terminate the business relationship and consider disclosure to the Financial Intelligence Unit

Applies to

specified businesses

Deadlines

• 31 December 2023: Deadline to identify affected business relationships, remediate CDD under points 2-4, notify the Commission of any relationships that cannot be remediated, and review relationship risk assessments where South Africa is a relevant risk factor