Court curbs FIC’s penalty powers in win for small law firm

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.

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).

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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.

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.

When the legal firm appealed to the FIC’s Board of Appeal, it ruled that the “calculation by the FIC of the appellant’s non-compliance from 2017 cannot be faulted”, effectively allowing the FIC to look at the firm’s conduct over several years.

The high court disagreed. It found that including that earlier period had a material impact on the severity of the sanction.

The judgment notes: “It is undeniable that such a period or long ‘duration’ has a severe impact on the method the FIC computes the administrative penalties increasing same substantially.” (sic)

The court ultimately set aside the appeal board’s finding and ordered that “any recalculation of the administrative sanctions is limited to the period from 19 December 2022 onwards”.

Remedial steps as evidence 

Before December 2022, the Legal Practice Council (LPC) and its predecessors were responsible for ensuring compliance with Fica.

The court found that the FIC did not intervene while the LPC was the designated authority, despite having mechanisms to do so.

“Notably, the FIC remained silent, failing to exercise its oversight powers …”

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.

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.

The appeal board refused to admit this evidence, reasoning that additional remedial information “would serve no purpose because the Centre in its decision … accepted that appropriate remedial actions had been taken to avoid recurrence”.

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.

“This refusal must thus be set aside, and the FIC must consider all the remedial information put before it,” the ruling noted.

It accordingly ordered that the DocFox/nCino KYC service level agreement be admitted and taken into account in any recalculation of the penalty.

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Broader impact 

Although the court acknowledged the importance of strict compliance with anti-money laundering laws, it emphasised that enforcement must be proportionate.

“This Court fully understands the need for strict adherence to this Act to prevent or identify money laundering and funding of terrorist activities,” it said, but added that the FIC “must … consider a genuine risk assessment … and sanction proportionally”.

The LPC, which participated in the case as amicus curiae, supported the legal firm’s position and warned of the broader impact on smaller practices if retrospective sanctions were allowed.

It argued that such an approach could require the FIC to pursue “all historically non-compliant practitioners” and could have a “severe impact” on the profession.

‘We know all our clients by name’

Len Dekker of Len Dekker Attorneys told Moneyweb that his legal firm operates as a “small family business”.

“We know all our clients by name.”

He says the firm has always had internal rules in place to ensure compliance and to verify clients and monitor transactions.

He rejects the FIC’s stance that compliance is an “all or nothing” matter.

“In a small practice where clients are known personally and operations are limited internal controls can still be effective.”

Dekker, who was admitted as an attorney in 1973 and is approaching 80, says the FIC also incorrectly described his firm as “conveyancers”, which it is not.

The ruling means the penalty will have to be recalculated on a narrower basis and with additional mitigating evidence.

Although the court said sanctions can still be imposed, it has limited how they are calculated.

Says Dekker: “There will still be sanctions, but it won’t 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.

“So the fine will be far lower than the extravagant R235 000.”

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