FSCA issues over R900m in fines in FY2024
A huge jump from the R100m in 2023.
by Liesl Peyper · MoneywebThe Financial Sector Conduct Authority (FSCA) has suspended the licences of 1 061 financial service providers in the past financial year and debarred 156 individuals, it notes in its latest annual report.
As at 31 March 2024, the FSCA had also imposed fines and penalties on 31 persons totalling R943 million – significantly higher than the R100 million imposed on 44 persons in 2023.
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One such significant fine was issued to the late Markus Jooste, former Steinhoff International boss. On 20 March this year, the FSCA imposed a R475 million on Jooste following an investigation. Jooste took his own life a day later.
Read:
Markus Jooste slapped with a R475m fine for Steinhoff misconduct
Markus Jooste’s death won’t have an impact on Steinhoff investigation – FSCA
Hawks arrest Jooste’s associate in Steinhoff insider trading case
The FSCA, mandated to oversee the entire financial services industry in South Africa, says the majority of its investigations over the past financial year related to unauthorised financial advisory and intermediary services and insurance businesses. Its enforceable undertakings are related, by and large, to unregistered insurance.
“Most of the debarments involved dishonest conduct,” it notes.
In addition to the debarments and penalties, the FSCA:
- Opened 518 new investigation cases, finalised 371, and has 426 ongoing cases;
- Authorised 668 licences for financial services providers;
- Issued 104 scam alerts; and
- Approved 59 licences for crypto asset service providers (Casps).
Read: The blizzard of cases swamping the FSCA [Apr 2023]
Crypto licences
Crypto assets have been acknowledged as a financial product under the Financial Advisory and Intermediary Services (Fais) Act, and the licensing process for Casps kicked off on 1 June 2023.
At that time, all existing institutions rendering financial services related to crypto assets were compelled to apply for licences by 30 November 2023.
The FSCA received 366 applications for Casp licences during the reporting period.
The number of Casp licences approved increased significantly after the end of the financial year under review, with over 138 approved by the end of June 2024, it notes.
Read: FSCA publishes full list of 75 crypto licences approved [Apr 2024]
The licensing of Casps heralded a new regulatory regime for the previously unrelated crypto industry. By licensing them, the FSCA aims to eliminate crypto-related scams.
Efforts to exit the grey list
FSCA Commissioner Unathi Kamlana says in the foreword of the annual report that the institution increased its collaboration with international and domestic partners to combat financial crime in the past financial year.
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The FSCA has also strengthened its anti-money laundering and combating the financing of terrorism (AML/CFT) supervisory capacity by appointing nine additional staff members, with more appointments planned.
Read:
FIC says SA could exit the grey list within months
From grey list to clearer conscience by next October?
Kamlana notes that these were all efforts to contribute to the multi-stakeholder effort led by National Treasury for South Africa to exit the Financial Action Task Force (FATF) ‘grey list’.
“This enhanced capacity has enabled more in-depth and frequent inspections, and we have issued several administrative sanctions related to AML/CFT breaches, demonstrating our commitment to strengthening the integrity of the financial system and working towards removing South Africa from the grey list.”
Read:
SA cracks down on financial crime with record fines [Jun 2024]
FSCA ramps up war on scammers [Jul 2024]
South Africa was grey-listed in February 2023 for not complying with international standards for preventing money laundering, terrorist financing, and proliferation (of weapons of mass destruction) financing.
In its June report, the FATF said South Africa had taken steps towards improving its regime, including implementing and updating its supervisory risk assessment tools. However, it should continue to work on implementing its action plan to address seven remaining strategic deficiencies. These will need to be resolved in time for South Africa’s reassessment in February 2025.
FSCA’s finances
In the 2024 financial year, the FSCA’s revenue grew by 6% to R1.1 billion. The financial advisory and intermediary services, pensions and insurance industries were the major contributors (81%) to the FSCA’s revenue in the form of levy income.
The FSCA decreased its operating costs by 10% in the past financial year due to a hybrid working model and lower office space rentals.
It reported a surplus of R159 million (2023: R9.5 million deficit).
Read: FSCA asks banks, insurers for consumer education plans
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