TRUST AND TRANSPARENCY KEY TO MODERN MINING SUCCESS SW360
- Mar 26
- 4 min read
Updated: Mar 27
In South Africa, mining remains a cornerstone of the economy. In fact, government figures show that mining added about R451 billion to the economy in 2024. This equates to about 6% of the country’s GDP, but mining’s influence on South Africa’s economy goes far beyond the direct value it produces. The industry’s operations, spending, and export activities support and amplify economic activity across the country, with some estimating that the sector’s real contribution to the economy stands at well over 10% of GDP. This is why Financial Intelligence Centre Act (FICA) compliance carries so much weight.
Mining is not just another regulated sector; it is a systemically important one because weaknesses in customer due diligence, transaction monitoring, and reporting can expose the broader financial system to significant risks. The scale of transactions, reliance on contractors and suppliers, and frequent cross-border flows make mining particularly vulnerable to financial crime risks, such as money laundering, bribery, and illicit payments. These risks aren’t only posed by external actors; mining companies also carry a crucial responsibility to thoroughly vet their own employees to ensure that they have no links to illicit activities. By proactively screening staff, companies can detect potential risks before employees gain access to sensitive areas, significantly reducing the likelihood that criminal syndicates could exploit them to launder money or illegally trade in minerals. Imagine a mining operation extracting platinum in South Africa.
On paper, everything seems normal. But a single employee with ties to criminal syndicates can create major vulnerabilities. This individual could facilitate the purchase of platinum using illicit funds or manipulate transactions to channel money through the company, effectively masking its origin. The metal is then exported to overseas markets, often through complex networks of shell companies or opaque trading partners. Once sold, the proceeds appear as legitimate revenue, and the mining company unknowingly becomes part of a broader money laundering chain. This scenario highlights why strict FICA compliance measures are essential to prevent major operational and reputational threats.
Why Compliance Matters
In mining, fraud impacts more than finances; it can also undermine strategic goals and the company’s reputation. Incidents like the one described above can lead to regulatory penalties, loss of operating licences, investor concerns, and the erosion of stakeholder trust. This is why strong internal controls, comprehensive compliance frameworks, and continuous monitoring are essential in modern mining operations. Here are critical factors for mining companies to consider:
1. Conduct customer identification and verification: Conduct Know Your Customer (KYC) procedures for all clients,suppliers, and contractors. This means verifying identities using valid official documents (ID, passport, or company registration documents) and identifying and verifying the beneficial owners of corporate clients.
2. Keep comprehensive records: Maintain records of all transactions, accounts, and client identification documents for at least five years and ensure documentation is easily accessible.
3. Take a risk-based approach: Conduct risk assessments for clients, transactions, and geographic areas and apply enhanced due diligence (EDD) for high-risk clients, such as politically exposed persons (PEPs) or clients from high-risk countries.
4. Focus on suspicious and unusual transaction monitoring: Establish systems to monitor unusual or suspicious activity, including large payments, offshore transfers, or irregular payment patterns. Should anything come up, be sure to report these transactions to the FIC within prescribed timelines.
5. Run training and awareness programmes: Train employees regularly on FICA compliance obligations to ensure that staff can recognise suspicious behaviour.
6. Implement clear compliance policies and procedures: Written FICA compliance policies and procedures are a must.
7. Keep third-party and supplier compliance in mind: All suppliers, contractors, and intermediaries must also comply with FICA requirements, where applicable. Additionally, be sure to conduct due diligence on joint venture partners and other business partners.
8. Prioritise ongoing monitoring: It is essential to continuously monitor client relationships and transactions for changes in risk profile and update client information periodically, especially for high-risk clients.
9. Establish AML governance, cross-border transactions, a nd cash handling policies: Mining companies should establish strong anti-money laundering (AML) governance by appointing a compliance officer, conducting internal audits, and ensuring board and management oversight of FICA compliance. Additionally, miners must exercise caution with international and cross- border transactions, establish clear procedures for handling large cash transactions and be aware of reporting thresholds to remain fully compliant.
Across mining, FICA compliance can no longer be viewed as a regulatory obligation, it is a critical safeguard that strengthens governance and improves transparency across the value chain. But conducting customer and supplier due diligence, monitoring transactions for unusual or suspicious activity, and maintaining accurate records is time-consuming.
With an automated verification, onboarding, and compliance application, like VOCA from SW360, accountable institutions can meet their FICA obligations with very little manual effort. Automated compliance tools improve efficiency, enhance accuracy, reduce human error, and provide real-time monitoring and reporting, helping companies stay fully compliant while freeing teams to focus on more strategic risk management.
For more information contact: Monica van der Spuy
M: + 27 (0)71 685 6476
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