FSCA Communication 27 of 2023: Criminal Record Verification for Financial Institutions

Introduction
In a significant development, the Financial Sector Conduct Authority (FSCA) has issued Communication 27 of 2023, outlining their plans to initiate a thorough verification process regarding certain designated individuals and significant owners within financial institutions. This communication is designed to enhance the transparency and integrity of the financial sector.

Who does this apply to? 
The FSCA's verification process will focus on specific categories of individuals within financial institutions. Those subject to this scrutiny will include significant owners, key individuals, directors, shareholders, members, and trustees of authorized Financial Services Providers (FSPs) as defined in the Financial Advisory and Intermediary Services Act, No. 37 of 2002, with a few exceptions. Significant owners and directors of collective investment scheme (CIS) managers as defined in the Collective Investment Schemes Control Act, No. 45 of 2002 are also part of this verification process.

Who is excluded? 
It's essential to note that the following entities licensed by the Prudential Authority (PA) will have a separate verification process determined by the PA:

• banks
• mutual banks
• insurers

In addition to the foregoing, the following entities will undergo their verification process in a separate phase, with further details to be provided by the FSCA at a later date:

• FSPs that are authorized for non-life and/or health service benefit products only
• sole proprietors
• partnerships
• members of the controlling body and senior management of Over the Counter Derivative Providers (ODPs) 

The Historical Context
The FSCA has already taken steps to verify information, including criminal records, for all new license applicants since June 1, 2022. New license applicants have been required to provide comprehensive verification information concerning various key individuals and stakeholders as part of the license application process. Now, the FSCA is expanding its scope and intends to continuously verify existing information, including criminal records of significant owners, directors, shareholders, members, and trustees of FSPs and CIS managers already holding licenses.

The Verification Partner: Managed Integrity Evaluation (Pty) Ltd (MIE) 
To facilitate this extensive verification process, the FSCA has enlisted the services of an independent service provider, Managed Integrity Evaluation (Pty) Ltd (MIE). MIE will be responsible for verifying records, including qualifications and criminal histories, on behalf of the FSCA. This collaboration underscores the FSCA's commitment to ensuring thorough and impartial verification.

The Verification Process
As part of the verification process, MIE may directly contact the individuals whose information needs verification. Impacted individuals will receive a link from MIE, delivered via the latest contact details as recorded in the FSCA's system. This link will allow individuals to book appointments at the closest MIE fingerprint zone or satellite office, most convenient to their location. During the appointment, individuals must bring their official identification documents (ID book/card or passport) for verification purposes.

When Does it Start? 
The commencement of the verification process and the outreach to impacted individuals is scheduled to begin on November 1, 2023.