When an accounting firm is an accountable institution
When a South African accounting firm's company or trust work brings it within item 2 of the FIC Act's accountable institutions, and what follows.
By Achekam · · 4 min read · For Accountants & audit firms in South Africa
Ask a small accounting practice whether it is an accountable institution under the Financial Intelligence Centre Act and the answer is often "no, we're not a bank". Then ask what else the practice does. It registers companies for clients. It keeps their statutory registers and files their CIPC changes. One partner is a trustee of several family trusts and signs off their transactions. Another acts as a nominee director for a foreign client's local subsidiary.
Each of those services may matter more than the firm's audit or tax work when it comes to the FIC Act. Whether the practice is an accountable institution depends less on calling itself an accounting firm and more on the business it actually carries on.
The Act and why it reaches professional firms
The government's page on the Financial Intelligence Centre Act 38 of 2001 describes it as the law that establishes the Financial Intelligence Centre and imposes duties on institutions and other persons who might be used for money laundering. Accountable institutions are those listed in the Act, and the list is defined by activity, not by profession.
That is why the question cannot be answered from a firm's name or its professional body. It must be answered service by service.
Item 2: creating, operating or managing companies
The FIC lists as an accountable institution, under item 2, anyone who carries on the business of helping clients plan or carry out the creation, operation or management of a company or close corporation. The FIC treats such businesses as trust and company service providers, which are subject to FIC Act obligations.
For an accounting practice, services that may bring it within that description include:
- forming companies or close corporations for clients;
- providing company secretarial services, such as maintaining registers and filing changes;
- acting as the registered office or managing the administration of client companies;
- helping clients plan a group structure and then carrying it out.
The words "carries on the business" matter. A firm that does this work as a regular part of its services is in a different position from one that did it once as a favour. If the firm offers it, advertises it, or charges for it routinely, assume item 2 needs a careful look.
Nominees, trust arrangements and trustee transactions
Item 2 goes further than companies. According to the FIC, it also covers anyone who acts, or arranges for another to act, as a nominee for a client, anyone who creates trust arrangements for clients, and anyone who carries out transactions as a trustee in relation to trust property.
In practice this reaches:
| Activity | Why it may fall within item 2 |
|---|---|
| A partner or staff member acting as nominee director or shareholder | Acting as a nominee for a client |
| Arranging for someone else to act as nominee | Arranging for another to act as a nominee |
| Drafting or setting up family or business trusts | Creating trust arrangements for clients |
| A partner serving as trustee and approving payments or investments | Transactions as a trustee in relation to trust property |
Trusteeships are the activity firms most often overlook, because they are frequently held by individual partners rather than by the firm. The FIC's description looks at the activity, so the firm should identify every trusteeship its people hold through their work.
What the FIC expects of trust and company service providers
The FIC's page on trust and company service providers explains how item 2 applies and points to the guidance that follows from it. It refers these businesses to Public Compliance Communication 6A on item 2, to PCC 53 on Risk Management and Compliance Programmes, and to Directive 6 of 2023 on submitting risk and compliance returns. The FIC has also published a draft sector risk assessment for accountants.
A firm that concludes it falls within item 2 has work to do: registration with the FIC, a risk management and compliance programme, customer due diligence, and reporting. Registration is covered in registering with the FIC on goAML, and the reports an accountable institution files are covered in cash threshold and suspicious transaction reports.
The Act has changed since 2001
The government's page lists amendments to the FIC Act, including the Financial Intelligence Centre Amendment Act 1 of 2017 and the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act 22 of 2022. The same page points readers to SAFLII for a consolidated version of the amended Act, rather than the original 2001 text attached to it. Anyone reading the Act for an item 2 question should work from the consolidated text.
Achekam keeps no FICA profiles
Firms sometimes assume their practice software holds their FICA records. In Achekam it does not, and the firm should plan accordingly.
Achekam does not keep client compliance profiles such as FICA documents, AML risk ratings or PEP screening. Its Compliance Profiles page says so, and lists only clients that are missing a registration number or an income tax number.
What Achekam does offer is a client acceptance review. A firm can record an acceptance review after a conflict check against its own clients and contacts, and only a signed-in partner can approve it. Customer due diligence within that review is a tick-box confirmation by the preparer: Achekam runs no automatic FICA, CIPC or sanctions check.
So the firm needs a separate home for its due diligence: the identity documents, the beneficial ownership information, the risk rating and the reasons for it. Whatever the firm uses, the acceptance review in Achekam should refer to it, so that the partner approving the client can see that due diligence was done and where the evidence sits.
List every service the firm provides and every trusteeship and nominee role its people hold through their work. Mark each one against item 2, read PCC 6A for the borderline cases, and record the firm's conclusion, with reasons, in a note signed by the managing partner.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
