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By Jaqui Pinto, Senior Associate at Webber Wentzel

Government has introduced new or amended regulations relating to FICA and the import and export of certain minerals or other items, which may be relevant to different mining companies.

Jaqui Pinto Senior Associate at Webber WentzelESG has become the latest buzzword globally and one which keenly affects the mining industry. As part of the 'G' in ESG in 2022, the South African government introduced legislative and policy amendments aimed at tackling issues of money-laundering, terrorist activities and theft. These changes come at a time where government has mentioned capacitating the South African Police Service and creating a Minerals and Precious Metals Theft Unit. 

Although moves to combat these issues are welcome, some of the changes will affect the mining industry and may place inadvertent administrative burdens on companies. They should be aware of these matters, to ensure they comply.

Webber Wentzel discusses these amendments below.

The Financial Intelligence Centre Act

On 30 November 2022, amended schedules to the Financial Intelligence Centre Act, 2001 (FICA) were published which took effect from 19 December 2022.

Schedule 1 to FICA contains the list of accountable institutions, and effectively determines a wider scope for FICA. The businesses set out in schedule 1 must comply with a number of provisions of FICA when dealing with their customers. The obligations of accountable institutions include: (i) registration with the Financial Intelligence Centre; (ii) conducting customer due diligence; (iii) keeping records of client information and transactions; (iv) developing, documenting, maintaining and implementing a Risk Management and Compliance Programme; (v) training employees on FICA compliance obligations; (vi) appointing a compliance officer; and (vii) reporting obligations.

The mining sector already supports responsible initiatives that combat money laundering, including the reporting obligations that help to combat organised crime and all aspects associated with illicit trade. However, the latest amendments to FICA will directly catch various mining companies and bring them into the category of "accountable institutions" in terms of FICA.

The amendments have introduced a category of high value goods dealers as an accountable institution. According to the consultation paper, this change was aimed at the retail sector, as the risk of money laundering and terrorist financing lies in this area, but the definition of high value good dealer will catch many mining companies too. The new accountable institution related to high value goods is defined as "[a] person who carries on the business of dealing in high-value goods in respect of any transaction where such a business receives payment in any form to the value of ZAR100 000.00 or more, whether the payment is made in a single operation or in more than one operation that appears to be linked, where “high-value goods” means any item that is valued in that business at ZAR100 000.00 or more."

Mines should carefully consider whether they fall into this definition, and if so, how they must start complying with FICA as an accountable institution.

Trade Policy Directive

On 30 November 2022, the Trade Policy Directive and Notice in terms of section 6 of the International Trade Administration Act, 71 of 2002, on the exportation of ferrous and non-ferrous waste and scrap metal, was published (Trade Policy Directive). This Trade Policy Directive puts measures in place to address damage to public infrastructure and the economy by restricting the trade of waste scrap and semi-processed metals.

The Trade Policy Directive prohibits the export of certain ferrous and non-ferrous waste and scrap metal (including copper). Mining companies should consider whether they will be caught by this, and if so, apply for the necessary permits.

The guidelines published by the Department of Trade, Industry and Competition on 30 November 2022 give details on the process to be followed to obtain the necessary permits (the Guidelines were amended  on 1 December 2022). These guidelines are: (i) the Import Control Guidelines on the Importation of Certain Metal Processing Machinery and Mechanical Appliances, including Furnaces, Granulators, Guillotines and Shredders; and (ii) the Export Control Guidelines on the Exportation of Semi-Finished Metal Products (collectively, the Guidelines).  Mining companies should check both Guidelines to see whether they will be affected.

The above actions indicate the growing trend towards increasing governance structures and regulatory oversight over certain aspects of various industries, and they are of relevance to the mining sector as well. Although the energy crisis has become front and centre of mines’ preoccupations, they should not lose sight of these changes, which could affect their ability to meet governance requirements and ensure that their adherence to ESG standards remains high. 

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