- The Financial Sector Conduct Authority (FSCA) imposed record fines totalling over R943 million during the 2023/24 year for various financial misconduct, including FICA breaches[1], a steep rise from R100 million the previous year.
- Between April 2024 and April 2025, the Financial Intelligence Centre (FIC) imposed penalties ranging from R20,000 to R7.8 million on various accountable institutions for non-compliance with FICA regulations[2].
- Penalties can be as high as R10 million for natural persons and R50 million for legal persons[3], showing the severity of consequences for individuals and companies failing to meet FICA obligations.
- These figures reflect a growing enforcement intensity and financial risks for non-compliance, underscoring why FICA adherence is crucial for financial institutions and alternative funders like Paragon Finance.
04 November 2025: In the finance and lending industry, the term “FICA” is often regarded as a tedious regulatory hurdle that clients and businesses alike want to get past quickly. Yet this perspective misses the bigger picture. FICA compliance is far more than bureaucracy; it is a critical business asset that fosters trust, mitigates risk, and unlocks growth by signalling integrity and responsibility in an increasingly complex financial landscape.
The Financial Intelligence Centre Act (FICA) is South Africa’s local implementation of the global ‘Know Your Client’ (KYC) principle, guided by international standards set by the Financial Action Task Force (FATF). After substantial reforms, South Africa was officially removed from the FATF greylist in October 2025[4], marking a significant milestone in strengthening the country’s financial system against money laundering and corruption. This progress reflects sustained government and private sector efforts to improve compliance and enforcement.
Compliance with FICA safeguards against illicit activities such as money laundering, terrorism financing, and the proliferation of weapons of mass destruction. For businesses, this translates to due diligence that filters out high-risk or fraudulent clients, protecting both the company and the economy at large.
“At Paragon Finance, we believe that good governance is the foundation of trust and being FICA compliant is not simply a regulatory box to tick but rather a critical layer of risk management and business integrity. Being FICA compliant is a clear sign that a company values transparency, security and responsible business. For instance, cases where proper due diligence was not conducted have resulted in damage and financial loss, such as failing to detect politically exposed persons (PEPs) or flagging high-risk clients. Stringent FICA processes avoid costly litigation and reputational harm by identifying and managing such risks upfront,” assures Andrew MacPherson, Paragon Finance’s Legal and Compliance Manager.
Companies that take compliance seriously signal to clients, investors, and partners that they uphold the highest standards of integrity. This is especially vital for alternative funders who must compete against larger financial institutions. While some big players may deem fines just a business cost and choose to overlook certain requirements, Paragon Finance believes true sustainability comes through transparency and robust governance.
[1] https://www.ensafrica.com/news/detail/9211/fsca-sets-new-record-for-fica-penalties-
[2] https://www.masthead.co.za/media-articles/fic-act-sanctions-lessons-from-the-past-year
[3] https://www.kernattorneys.com/post/fica-compliance-guide-south-africa-2025
[4] Treasury on South Africa South Africa exiting FATF greylist on 24 October 2025 | South African Government
“Clients want assurance that they are dealing with a legitimate, trustworthy lender, a factor that directly impacts long-term relationships and market credibility. Non-compliant businesses risk losing investor confidence, international partnerships, and ultimately market access,” explains MacPherson.
Seamless Compliance through Advanced Technology
FICA compliance no longer needs to be onerous. Paragon Finance leads with technology that simplifies and accelerates the verification process:
- Non-Document Verification: Using innovative AI-powered facial recognition and government database integration, clients can verify their identities digitally and instantly without repeatedly submitting physical documents. This drastically reduces client frustration and onboarding time.
- Automated Risk Rating: Paragon Finance’s dynamic risk management system customises client risk profiles based on multiple criteria and triggers enhanced due diligence when red flags arise.
- Real-Time Compliance Monitoring: Continuous scanning of sanctions lists, politically exposed persons, and media reports ensures ongoing vigilance against emerging risks.
- Secure Digital Repositories: All documents and verifications are securely stored and accessible, facilitating easy compliance audits and reporting.
By embracing these tools, Paragon Finance turns compliance from a “schlep” into a smooth, client-friendly journey that keeps funding processes swift and secure.
Tackling New Fraud Threats with Vigilance
The rise of AI-enabled fraud, such as deepfake identity scams and synthetic documents, presents new challenges for financial institutions. Fraudsters can imitate real clients convincingly, placing increased responsibility on compliance frameworks to detect subtle anomalies.
“At Paragon Finance, we use advanced AI-driven fraud detection systems capable of identifying even minor pixel-level inconsistencies in digital documents. Our commitment is to stay at the forefront of technology, continuously upgrading safeguards against cybercrime, phishing, and AI-powered scams,” says MacPherson.
“With the rise of AI-enabled fraud and complex cybercrime, staying compliant isn’t simply about following rules; it’s about proactively safeguarding your business, clients and reputation in an increasingly risky financial landscape,” MacPherson adds.
To make the compliance journey easier, clients should prepare by organising key documents in advance, such as IDs, proof of address, share registers, and ultimate beneficiary information. Digitally-savvy clients can leverage non-doc verification systems to verify their identities swiftly and securely.
Viewing FICA compliance as a collective effort benefits everyone: a robust, reliable financial system supports investment, economic growth, and security for all players involved.
FICA compliance is more than a regulatory obligation; it is a business asset that builds credibility, mitigates risk, and fosters opportunity in the modern financial ecosystem. Paragon Finance champions this approach, committed to rigorous governance, cutting-edge technology, and transparent client relationships that propel both our business and clients forward with confidence.
