Draft PCC 122 Clarifies FIC Act Obligations for SPVs Used by Credit Providers
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The Financial Intelligence Centre (FIC) has released Draft Public Compliance Communication 122 (Draft PCC 122) for consultation. The draft guidance focuses on how the Financial Intelligence Centre Act (FIC Act) applies to special purpose vehicles (SPVs) that qualify as accountable institutions under Item 11 of Schedule 1 of the FIC Act. Comments on the draft guidance are invited until 16 March 2026.
Background: What is Item 11?
Item 11 of Schedule 1 of the FIC Act designates credit providers as accountable institutions. This means entities that provide credit as part of their business must comply with anti-money laundering and counter-terrorist financing obligations under the FIC Act.
These obligations include, among others:
Registering with the FIC
Conducting customer due diligence (CDD)
Monitoring transactions and reporting suspicious activity
Implementing a Risk Management and Compliance Programme (RMCP).
In practice, credit provider activities are sometimes conducted through special purpose vehicles (SPVs) created as part of securitisation or structured finance arrangements.
What is a Special Purpose Vehicle?
An SPV (Special Purpose Vehicle) is a separate legal entity created for one specific transaction or purpose, such as holding assets or managing a financing structure. It is used to keep that activity separate from the main business, often to ring-fence risk or manage a particular project. Many SPVs have limited operations and may rely on a parent company to handle administration.
📌An Example
A bank creates a new company called Home Loan SPV (RF) Ltd and transfers a portfolio of home loans into it. The SPV holds those loans and raises money from investors using the loan repayments as security. The SPV exists only to manage that loan portfolio, not the bank’s full business. The draft guidance explains that an SPV is a legally separate entity created for a specific and limited purpose, often to ring-fence assets, liabilities or financial risks.
SPVs are commonly used in:
Securitisation structures
Asset-backed financing
Risk transfer arrangements
Structured finance transactions.
They may take the form of companies, trusts or other legal arrangements and often have restricted activities and limited operational capacity. In many cases, SPVs rely on a parent entity or group company to perform operational functions.
What Draft PCC 122 clarifies
Draft PCC 122 confirms that SPVs can qualify as accountable institutions when they conduct activities that fall within Item 11 or any other designated category in Schedule 1 of the FIC Act. The draft guidance makes several important points.
First, an SPV that performs activities of a credit provider must comply with the FIC Act in its own right, even if it has no employees or operational staff.
Second, such SPVs must register independently with the FIC on the goAML system before they can be linked to a group reporting structure.
Third, the draft guidance recognises that many SPVs rely on a parent or group entity for operational functions. It therefore allows certain delegation structures, where the primary accountable institution performs compliance functions on behalf of the SPV. These functions may include:
Customer due diligence
Transaction monitoring
Reporting suspicious transactions.
However, this delegation is mainly intended for passive SPVs that form part of a group structure. SPVs that operate independently with their own business activities may need to meet the compliance obligations themselves.
Practical implications for practitioners
The draft guidance highlights that SPVs cannot avoid FIC Act obligations simply because they have limited operations or rely on another entity to manage their activities.
Practitioners involved in structured finance, securitisation arrangements or credit portfolios should review whether any SPVs in their structures may qualify as accountable institutions.
Where they do, the SPV may need to:
register with the FIC
implement an appropriate RMCP
conduct customer due diligence
ensure transaction monitoring and reporting controls are in place
The draft PCC also clarifies how compliance responsibilities may be shared within group structures while maintaining the SPV’s legal accountability under the FIC Act.
Consultation process
The FIC has invited stakeholders to comment on Draft PCC 122 before it is finalised. Written submissions must be submitted to the Centre by 16 March 2026. Once finalised, the guidance will assist institutions in understanding how AML, counter-terrorist financing and proliferation financing requirements apply to SPVs operating in South Africa’s financial and credit markets.
