Page 101 - Profile's Unit Trusts and Collective Investments 2021 issue 2

Legislation and Guidelines

The systems and controls used to manage ML/TF risks must be documented in each
organisation’s RMCP. The Act requires the RMCP to specify, inter alia, how the accountable
institution will:
Establish and verify the identities of clients and associated persons
Distinguish between actual clients and prospective clients
Determine if a prospective client is a foreign prominent public official or domestic
prominent influential person
Ensure that it does not deal with anonymous or fictitious customers
Distinguish between low risk and high risk clients and what CCD procedures will apply in
each case
Terminate a business relationship when it is unable to complete CCD requirements
Scrutinise complex and abnormally large transactions and identify transactions with no
apparent business or lawful purpose
Determine when suspicious transactions or clients must be reported
The RMCP must also set out the record management process, including where records will be kept.
Employees of accountable institutions must receive comprehensive and ongoing training on FICA
in accordance with the RMCP to ensure that they are aware of their duties when engaging with clients.
Under the amended Act, responsibility for FICA compliance cannot simply be delegated by
executives. The amended Act requires that the person or persons with the highest level of
authority are now tasked with ensuring FICA compliance. A specific individual with sufficient
competence and seniority may be appointed to assist with ensuring compliance, but ultimate
oversight rests with executives.
Notwithstanding the rigorous requirements of the Act, FIC recognises that detecting ML/TF
activity is not an exact science. To quote again from the guidance notes, “The risk-based approach
is not a ‘zero failure’ approach as there may be occasions where an institution has taken all
reasonable measures to identify and mitigate ML/TF risks, but it is still exploited for money
laundering or terrorist financing purposes.”

POPI
POPI, the Protection of Personal Information Act, gives effect to the constitutional right to privacy
in South Africa. The Act tries to balance the legitimate needs of entities to collect and use personal data
for business and other purposes, and the right to privacy of individuals and organisations.
Although the Act was signed into law in November 2013, the Regulator was only formalised in
February 2017. The commencement date for the act was 1 July 2020. A grace period of one year
was granted, meaning that organisations that process “personal information” had until 1 July 2021
to comply with the legislation.
Note that the implementation of Section 58(2) of POPI – and only this section – was extended
till 1 February 2022. Section 58(2) states that, where prior authorisation is required, no
information processing may be carried out until the Information Regulator has given the all clear.
Responsible Parties
POPI defines three parties (who can be natural or juristic) that are potentially involved in the
processing of personal data:
The data subject: the party to whom the information relates.
The responsible party (usually called the “controller” in other parts of the world): the party who
determines why and how to process the data (eg, a company, a government department, an NGO).
The operator (called “processors” elsewhere): a party who processes personal information on
behalf of a responsible party (eg, an IT vendor).
POPI imposes various obligations on responsible parties. Where they use third parties to
process data, such operators must comply with the POPI requirements.
The main obligations of responsible parties under POPI can be summarised as follows:

99
Profile’s Unit Trusts & Collective Investments — Understanding Unit Trusts