Introduction to Fraud, KYC and AMLFraud, in various forms, is reaching new levels of sophistication. The implementation of information and analytical solutions is essential to an organization's security and profitability.
Fraud Prevention + Expense Management + Compliance = Profitability
NEVER ISSUED ID - USED IN CREDIT ENQUIRIES
Banks and other accountable institutions are required to retrospectively identify and verify the identity and other information of all clients that held accounts with them at the time when FIC Act of 2001 became operational.
"Accountable institutions are expected to apply a risk based approach in respect of customer relationships" Guideline Note 1 issued by the FIC April 2004.
Firms operating on a global basis will also need to demonstrate a robust compliance framework ensuring that each territory has sufficient oversight and that Anti Money Laundering ('AML') regulatory requirements are being adhered to at both a local and global level.
South Africa has implemented law that is designed to combat money laundering, which is the abuse of financial systems in order to hide and / or disguise the proceeds of crime. This law is known as the Financial Intelligence Centre Act, 38 of 2001, abbreviated to "FICA".
Sections 21 and 22 of FICA, and the Regulations thereto, require for all Accountable Institutions ensure that they have correct details for all of their customers by establishing and verifying certain customer details.
These sections of FICA, which directly impact on your service to your customers, have come to be known as Know-Your-Customer, abbreviated to "KYC". KYC is considered to be the cornerstone in money laundering control.
Historically institutions have been heavily fined for non- compliance. Actual losses may be 10 x - 12 x the compliance penalties, loss of reputation and customer losses.
CPB KYC SOLUTIONS SUITE
In light of the above, CPB has partnered with CrossCheck, Banks and Financial Services Institutions to develop products directed at the effective electronic authentication of customers and customer information.
KYC ON-BOARDING / REMEDIATION SOLUTION
CPB has built a FICA compliant fully integrated real-time information verification platform for the Accountable Institution as per their specifications.
This solution can integrate via API with the Accountable institution's on-boarding processes and systems.
CPB has built a FICA compliant remediation information verification platform. Specific additional requirements could be considered to ensure the Accountable Institution can fulfill their requirements and obligations as per the FICA legislation as well as their own internal requirements based on their risk framework.
In the next edition, we will look at the specific portions of the FICA act and will discuss the requirements across the various industries.
Written by: Marina Short (CEO)
Guidelines for the withdrawal from debt review
GUIDELINES FOR THE WITHDRAWAL FROM DEBT REVIEW
The National Credit Act (the Act) introduced debt review as a debt relief measure for over-indebted consumers. The process to withdraw or terminate debt review by the consumer or debt counsellor (DC) is not specified in the Act; however the credit industry has in the past years developed a voluntary withdrawal process and a Form 17.4 to facilitate the withdrawal process either by a consumer or DC. The application of this voluntary withdrawal process was overturned by the judgment granted in the case of Rougier v Nedbank which provided clarity on whether a debt counsellor has the statutory power to withdraw or terminate debt review. In terms of this judgment any act by a debt counsellor to terminate or withdraw debt review is beyond the statutory powers of a debt counsellor as espoused in the Act, therefore the conduct is prohibited.
WHEN CAN A CONSUMER EXIT DEBT REVIEW PROCESS?
A Consumer whose debts has been re-arranged must be issued with a Clearance Certificate by a Debt Counsellor within seven days after the Consumer has
It is vital that no arrears are envisaged and that all obligations under every credit agreement have been settled in full.
CAN A DEBT COUNSELLOR TERMINATE OR WITHDRAW DEBT REVIEW PROCESS?
No. A debt counsellor does not have statutory powers to terminate or withdraw the debt review process. This means that a debt counsellor can no longer issue Form 17.4 and update the Debt Help System (DHS) with status G (Voluntary withdrawal by consumer) or H (Withdrawal by a debt counsellor).
CAN A CONSUMER WITHDRAW FROM DEBT REVIEW PROCESS ONCE A DEBT REVIEW COURT ORDER HAS BEEN OBTAINED?
Once a debt review court order has been obtained a consumer cannot terminate or withdraw the debt review process. They can however approach the court to rescind the order or apply for an order which declares that the consumer is no longer over-indebted. Upon receipt of the rescission order, a debt counsellor must notify the relevant credit providers of the withdrawal by means of Form 17.W and update DHS with status G1.
CAN A CONSUMER WITHDRAW OR TERMINATE DEBT REVIEW PROCESS PRIOR TO OBTAINING DEBT REVIEW COURT ORDER?
Consumers can only withdraw or terminate the debt review process when the following has not been determined:
CAN A DEBT COUNSELLOR SUSPEND HIS/HER SERVICE FROM A CONSUMER UNDER DEBT REVIEW PROCESS?
Yes. Where a consumer is not co-operating with the debt counsellor (e.g. not providing relevant information or proof, non- payment of debt counselling fees, etc), a debt counsellor can suspend provision of his/her service to the consumer. Prior to suspension of the service, a debt counsellor must notify the consumer of the intended suspension of service, the consequences and allow the consumer 10 business days to remedy the situation. Where service is suspended, the debt counsellor must notify the credit providers of the withdrawal by means of Form 17.W and ensure that the consumer remains under debt review on DHS i.e. no update to DHS. ** It is important to note that a debt counsellor may not suspend a consumer because a consumer has chosen to make direct payment to the credit provider and not make use of the services of a Payment Distribution Agent (PDA).CAN A CONSUMER BE TRANSFERRED TO ANOTHER DEBT COUNSELLOR? Yes. A consumer under debt review may be transferred to another debt counsellor subject to payment of all debt counselling fees where it has been established that the previous debt counsellor followed the correct process. Form 17.7 should be used to facilitate this process and the NCR will need to be notified of the transfer telephonically.
WHAT IS THE DEBT HELP SYSTEM?
It is one of the conditions of registration of debt counsellors that they must regularly and timeously update the NCR Debt help system (DHS) on the progress of the debt review applications. It is a requirement in terms of the NCA, that all debt counsellors notify the bureaus when a client has applied for debt review. The Debt Help system ("DHS)) is a system that is owned and maintained by the NCR (National Credit Regulator). All registered debt counsellors must update DHS so that all registered credit bureaux can get the latest updated status of a consumer(s) status in relation to the debt review process. As instructed by the NCR, DHS is the only source of truth for all registered credit bureaux i.e. a registered credit bureaux may not accept any information that relates to debt review from any other source other than DHS. Files are uploaded daily to all credit bureaux and this ensures that all credit bureaux have access to the same data at the same time. The monitoring reports show that not all debt counsellors are loading and updating the records on progress of application. Credit providers have indicated that many consumers who are under debt counselling are not flagged at the Credit Bureaux which place considerable risk to credit providers and consumers and impact on the entire credit industry.
Debt Review Status Codes flow
Article written by: Shirley Querl Data - Compliance Manager Consumer Profile Bureau
Draft Debt collectors Amendment Bill published
The Bill marks a departure from the current position in that it seeks to subject attorneys who do debt collection to the jurisdiction of the Council for Debt Collectors in terms of the Debt Collectors Act (No 114 of 1998).