Background Screening Archives

Compliance requirements for Accountable Institutions

Regulatory compliance has never been more critical, especially with increasing concerns over financial crimes such as money laundering, terrorist financing, and proliferation financing. The Financial Intelligence Centre (FIC) has reinforced the obligations of accountable institutions through Directive 8 and Guidance Note 7A, outlining key compliance requirements under the Financial Intelligence Centre Act, 2001 (FIC Act).

For companies seeking to navigate these obligations efficiently, background screening, risk management, and thorough client vetting are essential. MIE’s expertise in criminal checks, qualification verification, employee vetting, and identity authentication helps ensure seamless compliance. This article explores the key aspects of Directive 8 and Guidance Note 7A, and how MIE can assist accountable institutions in meeting their compliance obligations.

Understanding Directive 8 and Guidance Note 7A

Clarifying the scope of Directive 8

Directive 8 mandates that accountable institutions must screen both prospective and current employees for competence and integrity. This includes assessing individuals against targeted financial sanctions lists to mitigate the risk of association with money laundering, terrorist financing, and proliferation financing.

Obligations under Guidance Note 7A

Guidance Note 7A, finalised on 13 February 2025, offers detailed guidance on implementing various aspects of the FIC Act. It emphasises the development and maintenance of a Risk Management and Compliance Programme (RMCP) that must be approved by senior management or the board of directors.

The RMCP should include:

Procedures for customer due diligence (CDD), including client identification and verification.
Processes for ongoing monitoring of client activities.
Protocols for record-keeping and reporting of suspicious transactions.
Measures to ensure compliance with targeted financial sanctions.

Employee screening and risk mitigation

Both Directive 8 and Guidance Note 7A emphasise the critical role of employee screening. Accountable institutions must implement risk-based employee vetting to ensure their workforce aligns with the integrity requirements defined in their RMCP. This approach significantly reduces internal risks associated with financial crime.

Ongoing monitoring is essential

Compliance is not a one-time exercise. Institutions must engage in continuous monitoring, update their RMCP regularly, train employees on regulatory developments, and remain vigilant to changes in compliance obligations.

Balancing compliance and privacy

While conducting CDD and employee vetting, institutions must comply with data protection regulations such as POPIA (Protection of Personal Information Act). This means implementing strict measures to protect personal information while fulfilling legal and compliance duties.

MIE Webinar: Understanding Directive 8

This essential webinar explains what Directive 8 is and why it’s crucial for South Africa’s financial sector. Watch now to understand how Directive 8 is reshaping compliance in South Africa’s financial landscape and why it is vital for you to stay informed.

Implementing Directive 8 and Guidance Note 7A compliance measures with MIE

1. Conduct comprehensive vetting

MIE’s background screening services support compliance with Directive 8 by verifying employee and client identities, conducting criminal record checks, and validating academic and professional qualifications.

2. Use reliable independent verification

MIE leverages independent and credible data sources to verify client and employee information, ensuring institutions meet CDD and employee vetting obligations with confidence.

3. Strengthen risk management programs

With access to MIE’s criminal checks, qualification verification, and sanctions screening, institutions can integrate accurate data into their RMCP and enhance their risk mitigation strategies.

4. Ongoing monitoring and compliance support

MIE’s solutions assist with ongoing client and employee monitoring, ensuring your compliance framework remains responsive and up to date.

Why choose MIE for Directive 8 compliance?

MIE is a trusted partner for background screening, employee vetting, risk management, and verification services that align with FIC requirements. Our solutions help accountable institutions:

Conduct criminal record checks to ensure integrity.
Verify qualifications and employment history.
Screen against financial sanctions lists.
Implement robust, risk-based employee and customer due diligence.

Directive 8 and Guidance Note 7A represent a firm stance by the FIC to enhance anti-money laundering and anti-terrorism financing measures in South Africa. By implementing a compliant RMCP, conducting background screening, maintaining ongoing monitoring, and protecting personal data under POPIA, accountable institutions can significantly reduce financial crime risks.

With MIE as your compliance partner, navigating the regulatory landscape becomes easier. Our tools and expertise help you stay compliant, protect your business, and build trust with regulators and clients alike.

For more information on how MIE can assist with your compliance needs, contact us today.

There is no doubt that every industry across the world has been impacted by the global COVID-19 pandemic, and the background screening industry is no different. In South Africa, as in many countries, the hard lockdown enforced in March 2020 and the months that followed had both immediate impact and long-lasting repercussions.

Managed Integrity Evaluation’s (MIE) 10^th annual Background Screening Index (BSI) shares statistics and highlights the impact the pandemic had on levels of activities in the industry, showing how the lockdown affected demand for background screening, and emphasizing which industries were impacted in both activity and risk.

“One of the challenges continuously faced by recruitment professionals is the risk of candidates misrepresenting their professional, criminal, and academic histories in order to secure work,” says Jennifer Barkhuizen, Head of Communications at MIE. “This places added pressure on the recruitment process and further underpins the need to accurately and reliably assess candidates before hiring commences, to ensure that the candidate is the right fit for an organization, and that the necessary due diligence has taken place. Not only are financial and reputational risks mitigated for the organization, but undue pressure on recruitment budgets can be avoided.”

Another trend highlighted in the 2020 BSI report is that criminal record checks remain the most requested amongst all available checks, and although risk levels dropped to below 20% in 2020, this is expected to increase in 2021 due to lower lockdown levels, increased unemployment and economic strain.

“Interestingly, integrity assessments were the most-requested stand-alone psychometric assessments in 2020,” notes Barkhuizen. “This highlights the need for businesses to ensure that they are hiring quality candidates who will uphold the integrity of the organization.”

“The high unemployment rate in South Africa, coupled with retrenchments and organizations closing their doors, will contribute to the many challenges job-seekers face with finding employment, and further emphasizes the importance of background screening vigilance on the part of those responsible for hiring decisions.”

Looking ahead to 2021, Barkhuizen expects that background screening solutions will become an integral part of HR policies and procedures as businesses look to mitigate associated potential risks.