According to Section 42 of the FIC Act, ALL Accountable Institutions (AIs) must develop a Risk Management and Compliance Program (RMCP) that specifies how the business checks for PEP/DPEP/FPEP status before establishing a business relationship. 

In practice, this means that your business must screen all individuals and legal entities against PEP/DPEP/FPEP databases during the first phase of customer due diligence before any contracts are signed or qualifying payments are made.  

We have compiled a short list of FAQs to assist our clients in ensuring their FICA compliance and avoiding significant fines. 

What do PEP/DPEP/FPEP mean? 

A Politically Exposed Person (PEP) can broadly be understood as any individual who currently holds or has held political power. The list is expansive and covers not only individuals in political positions, but also their family members and close associates. There are more specific classifications to distinguish between domestic and foreign PEPs, which are below: 

Please note that as of the 22nd of December 2022, two popular acronyms have changed. They are now: 

• Domestic Prominent Influential Person (DPIP) >>> Domestic Politically Exposed Persons (DPEPs). 
• Foreign Prominent Public Officials (FPPOs) >>> Foreign Politically Exposed Persons (FPEPs).  

What must I do if a client/customer is a PEP/DPEP/FPEP?

According to Section 21G of the FIC Act, how you are legally obligated to handle a PEP/DPEP/FPPO depends on your business’s Risk Management and Compliance Program (RMCP). However, standard practice often dictates that upon detecting a PEP/DPEP/FPEP, an AI must:

• Conduct Enhanced Due Diligence (EDD) on the individual.
• Get upper-management approval to establish a business relationship. 

Does the FIC’s free Targeted Financial Sanctions (TFC) check comply with FICA?

NO. The FIC’s free service, available here, does not meet the minimum standards for FICA compliance because it does not check for PEP/DPEP/FPEP status. 

Will I get Fined if I Don’t Screen for PEP/DPEP/FPEP and Watchlist Status?

FICA’s obligation to screen for PEP/DPEP/FPEP status applies to all AIs no matter how large or small. Accordingly, any AI which does not conduct the required screening is liable to be fined. 

How Much Are the Fines for Non-Compliance with FICA? 

The exact fines for FICA will depend on your exact violations, but fines often total millions of Rands. Over the last twelve months, 19 notable FICA non-compliance fines have been issued, totalling over R183 million and averaging R9.6 million per fine.