When your business closes a deal on expensive heavy machinery, or your manufacturing company ships out high-value industrial equipment, compliance paperwork is probably the last thing on your mind.
You may have crossed a threshold and been classified as a High-Value Goods Dealer (HVGD), a designation that many in the industry don't know exist. An HVGD includes any business that trades, buys or sells high value goods that have an individual sales price of R100 000 or greater, whether in the retail or wholesale sector.
Under South Africa's Financial Intelligence Centre Act (FICA), these businesses become "Accountable Institutions" and are subject to the same requirements as banks, attorneys, credit providers and estate agents.
Understanding the compliance risk
The reason HVGD’s are under the spotlight is because they are at a higher risk of being abused for financial related crimes, such as money laundering or terror related financing schemes.
Whilst we often see criminals enjoying the spoils of their illicit activities by buying expensive cars, electronics and jewellery, HVGD’s may also be used in much more creative ways.
As an example, criminals might look to exploit the legitimate need for expensive equipment in mining, construction and infrastructure projects across Africa. The sheer value of these transactions, where a single excavator or drilling rig can cost millions of rands, makes it easy to move large sums while maintaining the appearance of normal business operations.
One common method involves shell companies purchasing fleets of construction equipment with illicit funds, then either leasing them back to legitimate businesses, moving them cross border for sale or immediately reselling them at a loss, effectively converting dirty money into "clean" proceeds from equipment sales. Rather make a loss than be caught with hot money.
This is exactly why the sale or trade of an item valued at R100,000+ for construction equipment or vehicles and industrial machinery sets off FICA compliance obligations.
What this means for your business
Once you have crossed that threshold, you are legally required to:
- Register with the Financial Intelligence Centre (FIC)
- Verify the identity of a client, whether an individual or legal person
- Check whether the client is sanctioned or politically exposed
- Report suspicious transactions or cash payments of R50,000 or greater to the FIC
- Maintain detailed records for at least five years
- Develop and implement a Risk Management and Compliance Programme (RMCP) that details all the processes in place to comply with FICA
Download our complete FICA FAQ Guide.
The real cost of non-compliance
Businesses face penalties of up to R100-million for FICA non-compliance, plus potential criminal liability. Beyond the financial hit, there's reputational damage: being linked to money laundering investigations can devastate client relationships and tarnish years of business credibility.
Taking action
The good news: FICA compliance does not have to disrupt your operations. Modern compliance solutions are designed specifically for non-financial institutions, streamlining customer verification, automating record-keeping, and flagging potentially higher risk clients such as those with negative news around them, or are sanctioned or politically exposed.
Join the upcoming FICA masterclass webinar
If you're reading this and realizing your business may already be operating as an unregistered HVGD, you're not alone - and there's a clear path forward.
Join nCino KYC, FICA compliance experts, for an online webinar on 28 January at 10:00 where we’ll specifically cover:
- Key FICA Obligations for Accountable Institutions
- Real-world examples of non-compliance
- How to identify red flags and industry risks
- Consequences of FICA non-compliance
- Practical tips for adhering to FICA - How technology can simplify your FICA processes
With the new year underway and the FIC intensifying enforcement, now is the time to ensure your compliance house is in order.
Reserve your spot now! Click here to register
About nCino KYC:
nCino KYC is powering a new era in FICA. We take the hours and complexity out of FICA compliance by giving your team the software and services to work faster, smarter, and with complete confidence.