What is a High-Value Goods Dealer (HVGD) in South Africa?
South Africa’s primary anti-financial crime legislation, the Financial Intelligence Centre Act (FICA), has been changed to update the number of businesses that are classified as Accountable Institutions (AIs). As part of these changes, dozens of new businesses are now classified as High-Value Goods Dealers (HVGDs).
So, what is a HVGD?
A HVGD is any business that receives payments of R100 000 or more per item.
For example, a business that sells a luxury handbag for R113,000 is classified as a HVGD.
HVGDs include businesses that sell an item for a total value of R100 000 even if that value is split up over several transactions. For instance, a business that sells a luxury watch worth R150 000 paid for in three transactions of R50 000 each is still classified as a HVGD.
Furthermore, if a business sells only one item worth over R100 000, that business is still classified as a HVGD and must adhere to FICA’s compliance obligations.
Finally, a High-Value Good can be first-hand, second-hand, or fifth-hand. How new the item is does not affect its high-value good status. A 1940s Rolls-Royce or century-old painting will both still be classified as a high-value good, provided their value is over R100 000.
Which Transactions do NOT Make You a HVGD?
First, multiple smaller items that are each worth less than R100 000, yet total over R100 000 when added together, do not entail a high-value goods transaction. For example, five handbags worth R40 000 do not classify a business as a HVGD.
Second, non-tangible items like stocks and cryptocurrency are not classified as High-Value Goods. This means that businesses like cryptocurrency exchanges and Forex traders are not classified as HVGDs (although they are bound by other stipulations in FICA).
What Are Common Examples of HVGDs?
- Motor vehicle dealers (Passenger and commercial vehicle dealers, both first-hand and second-hand)
- Truck and bus dealers
- Heavy equipment and machinery dealers (construction and farm equipment, etc.)
- Boat dealers
- Rare earth dealers (gold bars, platinum, etc.)
- High-end jewellery dealers (watches, diamonds and gold)
- Kruger Rand dealers
- Fine art dealers (famous paintings, sculptures, etc.)
What Does Directive 7 Mean for High-Value Goods Dealers (HVGDs)?
The FIC’s Directive 7 requires HVGDs to conduct two crucial forms of customer due diligence checks:
- Identity Verification: HVGDs must verify the identity of all customers. ThisIsMe provides identity verification services that allow your business to easily verify customer identities using only their South African ID number.
- PEP and Sanctions Screening: HVGDs must screen all customers for Politically Exposed Person (PEP) and Sanction status. ThisIsMe provides world-class PEP and Sanction screening services to help your business ensure FICA compliance.
Must HVGDs also Verify and Screen Their Employees?
Yes. Directive 8 of the FIC Act requires that all HVGDs are legally obligated to conduct due diligence on their employees.
As with their customers, HVGDs must therefore verify the identities of all their employees and screen them for PEP and Sanctioned status.
This must be done for all existing employees, as well as any future employees when they become employed by the HVGD.
Most importantly, all customer due diligence and employee due diligence checks must be done in accordance with the company’s Risk and Compliance Return (RCR) and Risk Management and Compliance Program (RMCP).
What is an RCR?
An RCR is a digital form created by the FIC. By filling it out, your company demonstrates that it understands money laundering risks and is acting in accordance with its Risk Management and Compliance Program (RMCP).
A properly completed RCR will detail how your business as a HVGD employs identity verification and PEP and Sanctions Screening services to identify and mitigate risk.
For High-Value Goods Dealers, the deadline for the submission of your RCR is the 31st of June.
This form must be completed digitally and can be found on the FIC’s website here.
What is an RMCP?
Our comprehensive range of services means that we can supply your company with the tools it needs to comply with the specific requirements for identity verification that are stipulated by the RCR.
However, for your company to be fully compliant with the FIC, our verification tools must be used in accordance with your company’s Risk Management and Compliance Programme (RMCP).
Properly developing an RMCP is a complex process that must be done with the correct professional assistance. We do not recommend relying upon the free RMCP templates that are available online, as the majority of these templates fail on audit. Failing an RMCP audit will cost your company time and money and should be avoided.
We have a network of qualified professionals who can assist your company with the completion of its RMCP. We will gladly connect you with these professionals and assist you throughout your compliance journey.
Identity Verification and PEP and Sanctions Checks for South Africa
ThisIsMe is South Africa’s leading provider of identity verification and risk assessment solutions. We offer a wide range of FICA-compliant KYC services that encompass politically exposed person checks, account verification services, and company sanction and credit checks. To experience our full suite of due diligence solutions and see how we can help your business meet its FICA compliance obligations, schedule a demo by contacting our team here.
