A firm of attorneys has been slapped with a R7.7m fine by the Financial Intelligence Centre (FIC) for failing to comply with governing legislation.

The Johannesburg headquartered firm, Kunene Ramapala, lost its appeal to the FIC appeal board to have the administrative sanction for gross negligence revoked, according to a BusinessLIVE report.

It has indicated that it will appeal against the board’s judgment in the High Court as it believes the fine to be excessively punitive.

While attorneys have previously been sanctioned by the FIC, this is the first outcome of an appeal lodged by an attorney against an administrative sanction issued by the FIC.

‘The FIC has consistently on public platforms pleaded with attorneys to comply with the FIC Act. The outcome of this appeal is a clear message that non-compliance may have serious consequences,’ FIC executive manager for compliance and prevention Christopher Malan said.

The FIC said an inspection of Kunene Ramapala in June 2023 found the firm had not complied with FIC Act requirements to document, maintain and implement a risk management and compliance programme and to scrutinise clients against the targeted financial sanctions list.

In addition, the firm failed to comply with FIC directives by not updating its registration details and by failing to file a risk and compliance return questionnaire within a specific time frame.

Directives have the force of law and are seen as an extension of the FIC Act.

The two major components of the fine were R3.8m for failing to document, maintain and implement a risk management and compliance programme and R3.9m for failing to scrutinise clients against the targeted financial sanctions list.

The FIC statement said that Kunene Ramapala conceded the merits of the case during the appeal and admitted its previous failure to comply.

Its appeal was limited to objections to the penalties, the BusinessLIVE report notes.

The appeal board found that the appellant was aware of its compliance obligations and had acted with gross negligence and wilfully failed to comply.

It rejected the firm’s claim that the penalties were disproportionate.

The FIC has been battling to get institutions to submit their risk and compliance return questionnaire, which is meant to assist companies in identifying the risks they face of money-laundering and terrorist financing. 

Legal practitioners and estate agents have been among the worst offenders.

Full BusinessLIVE report