The Financial Sector Conduct Authority (FSCA) confirmed its decision to withdraw the licence of South African firm Salt Asset Management (SAM) with effect from 15 September 2023.
This comes after the South African regulator provisionally withdrew the operating licence of Salt Asset Management in April 2023.
SAM was a licensed financial services provider (FSP) under the Financial Advisory and Intermediary Services (FAIS) Act and an accountable institution under the Financial Intelligence Centre (FIC) Act.
Following allegations of SAM’s potential involvement in money laundering activities relating to the Gold Leaf Tobacco Corporation, the FSCA conducted an inspection on SAM between 29 November and 1 December 2022 in terms of Section 45B of the FIC Act.
The inspection revealed “significant compliance deficiencies and a poor level of understanding by SAM of their money laundering and terrorist financing risks”, according to the South African watchdog.
SAM was found to be in breach of several requirements of the FIC Act by, among others, failing to:
- Develop, document, maintain and implement a risk management and compliance programme (RMCP) for anti-money laundering and counter terrorist financing;
- Keep customer due diligence and transaction records;
- Provide the Financial Intelligence Centre and FSCA with prescribed particulars of third parties that keep client records;
- Ensure that the institution does not establish a business relationship with anonymous clients and clients acting under false or fictitious names;
- Establish and verify the identity of clients and other persons;
- Understand and obtain information on business relationships;
- Conduct additional due diligence relating to legal persons;
- Conduct ongoing and enhanced due diligence;
- Terminate existing business relationships where it was unable to identify and verify the identity of clients, understand and obtain information about the business relationships and conduct ongoing due diligence; and
- Screen clients against relevant targeted financial sanctions lists.
Furthermore, the FSCA identified “other contraventions relating to the FAIS Act through its ongoing supervision of SAM”.
An inspection report detailing the above was provided to SAM, inviting them to respond to the findings and the FSCA’s provisional withdrawal of their licence. SAM “failed to respond to the inspection report and notice of provisional withdrawal, resulting in the FSCA’s decision to finally withdraw their FSP licence”, the watchdog added.
The effect of the licence withdrawal is that SAM may not offer any financial services to any financial customers and on behalf of any financial product provider.