**An Overview of South Africa’s Financial Sector Fraud Enforcement**
Over the past year, South Africa’s Financial Sector Conduct Authority (FSCA) has imposed fines totaling R100 million on firms and individuals found guilty of wrongdoing. In addition, many cases have been referred to the police and the Priority Crime Investigation Department (Hawks) for further investigation.
FSCA Chief Enforcement Officer Gerhard van Deventer presented the 2023 Regulatory Actions Report to financial service providers in Durban. He highlighted the many problems facing the sector, ranging from malfeasance by registered service providers to scams involving unregulated cryptocurrencies.
Over the past year, the authority has used almost every sanction at its disposal to deal with malfeasance, from imposing fines to withdrawing licenses. It has imposed R150 million in fines on individuals and companies, although in one case involving Viceroy a R50 million fine was overturned by the Financial Services Tribunal.
In addition to the fines, the FSCA suspended 984 licenses, revoked 421 licenses, imposed 210 bans, issued 47 public warnings and referred 70 cases to the relevant authorities for criminal investigation.
The authority relies on a sophisticated exchange monitoring system, an anonymous tip line, protected disclosures and a social media monitoring team to detect promises of unrealistic returns.
The FSCA found that many of the breaches related to the Financial Advisory and Intermediation Services Act (FAIS) and the Insurance Act, as well as the Financial Markets Act. Insurance investigations have mainly revealed unregistered insurance practices, particularly in funeral homes.
In response, the authority established a dedicated team to regulate unregistered insurance services offered by funeral directors.
Faced with these challenges, Gerhard van Deventer warned against fraudulent practices, including professionals “renting” their CV to be responsible for the management of financial services.
This crackdown on fraud in the financial sector in South Africa demonstrates the FSCA’s commitment to maintaining integrity and trust in the financial sector, while protecting consumers and investors from malfeasance.