Four key areas for compliance in 2024
17 Jan, 2024

Richard Rattue, MD of Compli-Serve SA

 

As is customary, I am sharing some key compliance tips for the year ahead. South Africa has witnessed a significant evolution in its regulatory landscape, with further change on the way.

 

Here are four key compliance considerations to keep in mind in 2024:

 

1. COFI: A game-changing acronym

 

The introduction of the Conduct of Financial Institutions Act (COFI) will mark a pivotal moment in South Africa’s financial regulatory landscape. I am not brave enough to predict an effective date, however, we can reasonably expect promulgation during the course of 2024.  COFI aims to consolidate and streamline the current sectoral approach of financial sector regulation, focusing on customer-centric market conduct. Key considerations for compliance under COFI include enhanced transparency, fair treatment of customers, and the obligation of financial institutions to act in their customers’ best interests. Though it creates further compliance requirements, COFI is an important step in enhancing trust and stability in the financial sector.

 

2. ESG is imperative, even if you’re over it

 

Investors, consumers, and regulators are increasingly emphasising the importance of sustainable and responsible business practices that align with Environmental, Social and Governance (ESG) principles. Companies operating in South Africa need to align their strategies with ESG principles, addressing environmental impact, social responsibility, and effective governance. It might seem like old news, but it’s important to recognise the sustainable journey financial services contributes to the overall well-being of society and the world.

 

3. Ignore AI at your peril (and keep crypto considerations in mind)

 

Integrating Artificial Intelligence (AI) into operations is essential in the fast-paced world we find ourselves in, improving operations and saving time. Ignoring what AI could do for your business will set you back behind the curve in times to come.

 

Digital assets such as cryptocurrency, continue to gather pace, despite the risks. We see several jurisdictions such as the UK,  seeking to become a crypto-friendly hub and share in the revenue streams.  Digital tokens are not going away, and while investing in crypto still requires caution, there is at least a firmer compliance hand in play to safeguard investors than was the case in the past and this trend will likely continue.

 

Crypto asset service providers in South Africa had to apply for a license to operate under FAIS and to comply by the end of November in 2023, or risk facing naming, shaming and incurring fines or other sanctions.

 

4. Grey that hasn’t gone away

 

South Africa is firmly on the radar of the Financial Action Task Force (FATF), while various local regulatory authorities actively work to enhance anti-money laundering and combating the financing of terrorism (AML/CFT) measures. Clear communication and collaboration with global regulatory bodies will help to navigate this challenge and strengthen our regulatory framework.  Politicians will likely be focused on the election, but it will require progress on the FATFs guidelines in 2024 if there is any chance of reaching the government’s goal of getting off the greylist by 2025. As well as to ensure key legislation, like COFI, gets enacted.

 

By proactively aligning operations with regulatory themes as above your business will be best placed to face the future, and can also contribute to the growth and stability of South Africa’s financial sector.

 

I wish you all the best for a productive 2024.

 

ENDS

 

 

Author

@Richard Rattue
+ posts

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