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A small, family-run law firm has won a high court case against the Financial Intelligence Centre (FIC), with the court ruling that administrative penalties cannot be calculated over a period when the regulator did not have enforcement authority.<\/p>\n
In a judgment handed down in the Gauteng High Court in Pretoria on Wednesday 25 March 2026, the court upheld an appeal by Len Dekker Attorneys Incorporated against sanctions imposed under the Financial Intelligence Centre Act (Fica).<\/p>\n
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The firm was found to have been non-compliant with certain provisions of the act and was sanctioned with steep administrative penalties amounting to close to R235 000.<\/p>\n
The case centres on whether the FIC was entitled to include years of alleged non-compliance dating back to 2017, even though it only became the supervisory authority for legal practitioners on 19 December 2022.<\/p>\n
When the legal firm appealed to the FIC\u2019s Board of Appeal, it ruled that the \u201ccalculation by the FIC of the appellant\u2019s non-compliance from 2017 cannot be faulted\u201d, effectively allowing the FIC to look at the firm\u2019s conduct over several years.<\/p>\n
\nThe high court disagreed.\u00a0It found that including that earlier period had a material impact on the severity of the sanction.<\/p>\n<\/blockquote>\n
The judgment notes: \u201cIt is undeniable that such a period or long \u2018duration\u2019 has a severe impact on the method the FIC computes the administrative penalties increasing same substantially.\u201d (sic)<\/p>\n
The court ultimately set aside the appeal board\u2019s finding and ordered that \u201cany recalculation of the administrative sanctions is limited to the period from 19 December 2022 onwards\u201d.<\/p>\n
Remedial steps as evidence\u00a0<\/strong><\/p>\n
Before December 2022, the Legal Practice Council (LPC) and its predecessors were responsible for ensuring compliance with Fica.<\/p>\n
\nThe court found that the FIC did not intervene while the LPC was the designated authority, despite having mechanisms to do so.<\/p>\n<\/blockquote>\n
\u201cNotably, the FIC remained silent, failing to exercise its oversight powers \u2026\u201d<\/p>\n
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A second key issue was whether the FIC and its appeal board were entitled to exclude evidence of remedial steps taken after the finding of non-compliance.<\/p>\n
The legal firm had sought to introduce evidence of its agreement with compliance service provider DocFox (since renamed to nCino KYC), which it argued demonstrated steps taken to prevent future breaches.<\/p>\n
The appeal board refused to admit this evidence, reasoning that additional remedial information \u201cwould serve no purpose because the Centre in its decision \u2026 accepted that appropriate remedial actions had been taken to avoid recurrence\u201d.<\/p>\n
The high court found that excluding relevant evidence without proper consideration was a reviewable error, and that all remedial steps must be considered when determining an appropriate sanction.<\/p>\n
\u201cThis refusal must thus be set aside, and the FIC must consider all the remedial information put before it,\u201d the ruling noted.<\/p>\n
It accordingly ordered that the DocFox\/nCino KYC service level agreement be admitted and taken into account in any recalculation of the penalty.<\/p>\n
Read: What our FATF exit teaches us about effective reform<\/p>\n
Broader impact\u00a0<\/strong><\/p>\n
Although the court acknowledged the importance of strict compliance with anti-money laundering laws, it emphasised that enforcement must be proportionate.<\/p>\n
\u201cThis Court fully understands the need for strict adherence to this Act to prevent or identify money laundering and funding of terrorist activities,\u201d it said, but added that the FIC \u201cmust \u2026 consider a genuine risk assessment \u2026 and sanction proportionally\u201d.<\/p>\n
The LPC, which participated in the case as amicus curiae, supported the legal firm\u2019s position and warned of the broader impact on smaller practices if retrospective sanctions were allowed.<\/p>\n
It argued that such an approach could require the FIC to pursue \u201call historically non-compliant practitioners\u201d and could have a \u201csevere impact\u201d on the profession.<\/p>\n
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\u2018We know all our clients by name\u2019 <\/strong><\/p>\n
Len Dekker of Len Dekker Attorneys told Moneyweb that his legal firm operates as a \u201csmall family business\u201d.<\/p>\n
\u201cWe know all our clients by name.\u201d<\/p>\n
He says the firm has always had internal rules in place to ensure compliance and to verify clients and monitor transactions.<\/p>\n
He rejects the FIC\u2019s stance that compliance is an \u201call or nothing\u201d matter.<\/p>\n
\u201cIn a small practice where clients are known personally and operations are limited internal controls can still be effective.\u201d<\/p>\n
Dekker, who was admitted as an attorney in 1973 and is approaching 80, says the FIC also incorrectly described his firm as \u201cconveyancers\u201d, which it is not.<\/p>\n
The ruling means the penalty will have to be recalculated on a narrower basis and with additional mitigating evidence.<\/p>\n
Although the court said sanctions can still be imposed, it has limited how they are calculated.<\/p>\n
Says Dekker: \u201cThere will still be sanctions, but it won\u2019t be based on the seven year-period. And the FIC will also have to take into account that we appointed a firm [DocFox\/nCino KYC] to ensure compliance.<\/p>\n
\u201cSo the fine will be far lower than the extravagant R235\u00a0000.\u201d<\/p>\n
Read: FIC takes a bigger stick to lawyers and estate agents over grey list<\/p>\n<\/p><\/div>\n