In November 2019 the Financial Action Task Force (“FATF”), which is the global body that promotes policies and sets international standards relating to the combating of money laundering and terrorist financing performed a Mutual Evaluation of South Africa’s Anti Money Laundering (“AML”) and Counter Finance Terrorism (“CFT”) systems and controls. The country was found to have deficiencies in its system as a result 67 recommendations were made by the FATF. South Africa was put under a one-year observation period in October 2021, giving the country time to address the Recommended Actions. In January 2023 an assessment of SA’s progress found that South Africa had made positive progress, reducing the 67 Recommended Actions to 8 strategic deficiencies. Despite our governments best efforts, passing two major Amendment Acts in 2022 South Africa was placed on the FATF grey list on the 24^th of February 2023.

Being placed on the FATF grey list might have negative impacts on the Insurance Industry particularly for those insurers who place heavy reliance on reinsurance programmes concluded with foreign reinsurers. These insurers are likely to experience enhanced Customer Due Diligence (CDD) and Know your Client (KYC) requirements potentially increasing the cost of compliance and reinsurance.

Some companies have internal policies that prevent them from doing business with grey listed countries. This could mean that some foreign reinsurers may not be willing to do business with South African insurance companies and this could have dire financial consequences.

With Maksure Risk Solutions’ stringent accountability and compliance measures in place, they have done their part in ensuring that we are taken off the grey list as soon as possible.

Maksure has done the following, amongst other things:

1. Ensured that they register as an Accountable Institution with the Financial Intelligence Centre (the (FIC);
2. Continuously trained employees on AML;
3. Adopted and implemented a Risk Management and Compliance Plan that speaks to their business model;
4. Kept a record of transactions;
5. Kept a record of the information obtained to verify a client’s identity and the nature of the business relationship, and the source of the funds that the client is expected to use to conclude transactions;
6. Conducted Customer Due Diligence which places responsibility on Accountable Institutions to know who they are doing business with; and
7. Conducted sanctions screening and in certain circumstances report to the FIC.

Accountable institutions must note that it’s not enough to have policies and procedures in place, they also have to demonstrate effectiveness of their internal systems and controls. A lot of organisations that have been fined by the FIC are not fined for money laundering itself but due to failure to show implementation and compliance with Customer Due Diligence, risk assessment, staff training and ongoing monitoring. In this changing regulatory environment, as Maksure Risk Solutions, will continue to demonstrate agility and adaptability.

“We are constantly investing in and tightening our internal systems and controls to ensure that we are in compliance with legislation. Our commitment to always keep abreast of the trends and ensure strict and timely compliance is what makes us the broker of choice”, says Lethubuhle Geraldine Ncube – Legal and Compliance Officer.

Contact our teams on Tel +27 11 805 0086 or Email: info@maksure.co.za.

About Maksure Risk Solutions

Maksure Risk Solutions is an Afro-Global independent specialist insurance and reinsurance broker with business footprint in Africa, Asia, East & Western Europe, South America and the Caribbean. We provide innovative and tailor-made risk solutions in Insurance and Reinsurance as well as Risk Financing and Actuarial Consulting geared towards capital management and strengthening our client’s balance sheet. Maksure is also one of the major players in Captive Management (Establishment & Management) in South Africa, Mauritius, Bermuda and various other jurisdictions. We have access into the Lloyds of London with a deep understanding of African markets. Our global nature ensures that our clients access quality capacity as well as some of the world’s latest thinking and solutions.