Three essential compliance considerations for 2023
3 Feb, 2023

Three essential compliance considerations for 2023

Richard Rattue, Managing Director of Compli-Serve SA

The last half of 2022 was certainly an interesting time, setting the scene for financial services’ compliance in 2023. Here are three key areas I believe should be on your radar.

1. Crypto assets + financial product = more compliance

Crypto assets named as a financial product late last year means crypto asset service providers (CASPs) will have greater oversight by the Regulator, and investors may take more comfort than has been the case to date. Of course, crypto assets are still a risky instrument to invest in, and we need only recall the FTX collapse that shook the crypto-sphere late last year as one recent example of sadly, a few crypto providers that have tried and failed to break into this potentially lucrative space.

Interest in crypto assets is here to stay and with developments such as Pick n Pay’s plan to offer crypto payments for groceries, it will become more mainstream as currency and as an investment and will likely face further compliance considerations or hurdles over time. Watch this space.

2. Money laundering threats are no grey area

Whether or not South Africa will join the Financial Action Task Force (FATF) grey list is yet to be confirmed (later this month – February) but the threat of such an event is clear. The outcome will be a moment in our history that should ultimately lead to stricter rules around Anti-Money Laundering (AML) measures and combating the financing of terrorism (CFT). Crypto assets fall under the ambit of the FATF as well and annual checks on whether AML practices are in progress may be conducted.

3. COFI be coming

Let us not forget about the major overhaul to regulation that is on its way. Under the Conduct of Financial Institutions Act (COFI), which is expected to become effective this year, there will be new conduct standards to adhere to.

Doing the right thing is at the heart of COFI and will be a major shift for compliance in the industry but will also make way for new and modernised regulations to fit today’s times – to cover Fintech for example – and to ensure customers are treated fairly. It won’t be a tick box exercise to stay in favour with the regulator, but rather an ongoing process to prove the right steps were taken, with the customer in mind.

A compliance-centric company culture stands a firm in good stead. The C-Suite must lead from the front and portray an ethical approach to all dealings in the business, and this must be carried throughout the company and to customers. COFI will command this, so failing on proper conduct could land you in hot water.

This year looks to be eventful for financial services and compliance requirements are shifting as time goes by. Being as prepared as possible includes managing expectations as best you can.

The three areas above summarise some crucial compliance considerations for the industry, and I wish you all the best for the year ahead.



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