Employee screening is a key but often neglected requirement under the Financial Intelligence Centre Act (FIC Act) in South Africa. Many businesses are either unaware of this obligation or fail to conduct the necessary checks, leaving themselves vulnerable to regulatory penalties and financial crime risks.

What Does the FIC Act Require?

The FIC Act mandates that accountable institutions (AIs) screen both prospective and current employees for competence and integrity, and regularly scrutinize employee information against targeted financial sanctions (TFS) lists. This screening must be conducted in a risk-based manner, with employees in high-risk roles (such as senior management or those involved in compliance) subject to more frequent and rigorous checks.

Where Businesses Fall Short

From our observations, many organizations either do not screen employees at all or limit their checks to basic criminal records. This overlooks critical areas such as financial background or employment history in high-risk sectors. Additionally, ongoing screening is often neglected, despite the legal requirement to periodically assess employees.

Consequences of Non-Compliance

Failing to comply with employee screening requirements exposes businesses to potential fines, reputational damage, and increased risks of money laundering, terrorist financing, and proliferation financing.

Best Practices for Compliance

To comply with the FIC Act, businesses should:

Integrate employee screening into their risk management and compliance program (RMCP).
Conduct thorough pre-employment and periodic checks.
Adjust screening frequency based on the employee’s risk level.

By adhering to these guidelines, businesses can safeguard themselves from regulatory breaches and contribute to the broader fight against financial crime.

The Importance of Employee Screening under the FIC Act