FSCA fines Ninety One Fund Managers R3 million for Fica non-compliance

The FSCA has fined Ninety One Fund Managers R3 million for Fica non-compliance and directed the company to fix the identified contraventions and also warned it against future breaches.

The Financial Sector Conduct Authority (FSCA) decided to take administrative action against Ninety One Fund Managers, a registered manager of collective investment schemes in terms of the Collective Investment Schemes Control Act and an accountable institution under the Financial Intelligence Centre Act (Fica) after an inspection.

The FSCA is responsible for supervising and enforcing compliance with Fica by managers of collective investment schemes.

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FSCA inspection at Ninety One showed Fica non-compliance

The FSCA conducted an inspection of Ninety One in terms of section 45B of Fica in September 2023 as part of its ongoing supervisory activities and found that Ninety One was in breach of sections 42(1) and (2) of Fica.

This section requires accountable institutions to develop, document, maintain and implement a Risk Management and Compliance Programme to identify, assess and mitigate money laundering and terrorist financing risks.

The FSCA says while Ninety One had developed a programme, it failed to implement it effectively, particularly regarding the risk rating of its clients. The programme was also technically deficient and did not adequately address these issues:

• Performing customer due diligence under sections 21, 21A, 21B and 21C when suspicious or unusual activity is identified (section 42(2)(j)); and
• determining whether a transaction is reportable as related to terrorist financing (section 42(2)(o)).

According to these sections, accountable institutions must develop, document, maintain and implement a risk management and compliance programme for anti-money laundering, counter-terrorist financing and proliferation financing.

The programme must outline how an accountable institution will mitigate its anti-money laundering, counter-terrorist financing and proliferation financing risks and ensure compliance with Fica.

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FSCA inspection also found Ninety One did not verify and identify clients

In addition, the FSCA found that Ninety One also did not comply with the provisions of section 21, 21B and 21C that require accountable institutions to identify and verify the identity of clients and beneficial owners and conduct ongoing customer due diligence.

Fica requires accountable institutions to conduct customer due diligence, which includes identifying and verifying clients, obtaining information on business relationships, conducting ongoing due diligence, and establishing whether the clients are politically exposed persons.

At the time of inspection, the FSCA says Ninety One did not adequately identify or verify some clients and their beneficial owners, nor conducted the required ongoing due diligence.

Ninety One then lodged an appeal with the Fica Appeal Board after the FSCA imposed the administrative sanction of R3 million in November 2024. The FSCA says Ninety One disputed the findings relating to customer due diligence.

“However, after further constructive engagements between the FSCA and Ninety One, the company agreed to settle the matter, which was confirmed as an order of the Appeal Board in terms of section 45D(7) of FICA in April 2025. The appeal has since been withdrawn.”

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FSCA agreed to suspend part of Ninety One’s fine

Due to Ninety One’s remedial actions, the FSCA agreed to suspend R500 000 of the R3 million financial penalty for a period of three years, conditional upon full remediation and sustained compliance with relevant provisions of Fica during the suspension period.

The FSCA says it views the breaches identified at Ninety One as serious, especially considering the size, complexity and risk exposure of its business as well as its position and impact in the South African market.

“An effective a Risk Management and Compliance Programme is essential not only for protecting institutions from financial crime, but also for safeguarding the integrity of the broader South African financial system.

“Proper due diligence of all clients is crucial to help identify and mitigate against suspicious and criminal elements from infiltrating the financial system. Financial institutions operating within large, international financial services groups are expected to demonstrate a heightened level of vigilance in this regard,” the FSCA says in a statement.

“This sanction serves as a reminder that the FSCA will not tolerate non-compliance with Fica. All accountable institutions are urged to continually review and enhance their anti-money laundering and terrorist financing controls at the highest levels and conduct thorough risk assessments on a regular basis. Failure to do so will result in firm regulatory action.”

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Fica and the Financial Action Task Force

The Financial Action Task Force (FATF) greylisted South Africa in February 2023 due to its failure to comply with FATF standards and measures to combat illicit financial flows, terrorist funding and potential threats to the integrity of the global financial system.

FATF is an intergovernmental body established in 1989 by the ministers of its member jurisdictions to protect financial systems and the broader economy from threats of money laundering and the financing of terrorism and proliferation, thereby strengthening financial sector integrity and contributing to safety and security.