Turning grey to gold: how simplified compliance drives success in a greylisted South Africa
When South Africa was greylisted in 2023, the country’s accountable institutions were forced to improve their compliance strategies.
This has several benefits, including helping Financial Service Providers (FSPs) to overcome heightened scrutiny from regulators and providing protection to customers against the ever-increasing threat of cybercrime.
At the same time, it is critical that these improved FICA compliance strategies don’t hinder client engagement and onboarding – making it important for FSPs to approach compliance holistically.
“We must identify exactly what we need to protect our clients and remain compliant, and ensure that we do not collect any unnecessary data or force our clients to do pointless tasks,” said Fedgroup Executive Director and GM: Investments Michael Field.
Lelani van der Merwe, Head of Governance, Risk Management, and Compliance at Fedgroup, added that the best way to achieve the ideal balance is through a risk-based compliance approach.
“In the past, compliance revolved around filling out checklists, but these lists were rigid and presumed that the correct questions were always being asked,” said van der Merwe.
A risk-based compliance approach solves these challenges, as it instead treats each situation on its merits.
What is necessary for compliance in one institution may not be necessary in another, and it is therefore critical that there is a degree of flexibility and critical thinking applied to the compliance process.
“We had a recent scenario where we learned that the entire set of documents we received from a prospective ‘client’ were fake and were instead an attempt at identity theft,” said Field.
“They had all passed the standard compliance processes and checklists of the bank they were using, but by using a risk-based approach, we could identify that something was off and saved a potential victim millions of rand.”
The importance of compliance
Field said that, conversely, the impact of a poor compliance strategy can have a devastating effect on an FSP – both in terms of huge fines and reputational damage.
In the case of smaller institutions and brokerages, these could go as far as to completely derail their operations and them having to close their businesses.
Accountable institutions must therefore treat compliance as a critical part of their business security and continuity plans.
Compliance must also not be viewed as only a preventative measure – as it can deliver active benefits for your company.
If your business remains compliant while keeping the requirements processes simple, clients will trust your organisation to store their data and will prefer your services thanks to the streamlined customer journey.
“At Fedgroup, we can fit an entire application form on a single page – as opposed to the reams of paper that many of these forms have historically comprised,” said Field.
“We can do this without compromising our compliance, because we have a clear and robust strategy that identifies exactly what data we need and what data we don’t.”
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