Financial Intelligence Centre Act (FICA)
Certain provisions of the Financial Intelligence Centre Act (FICA) came into operation on the 1st July 2003.
The aim of the Financial Intelligence Centre Act is to combat money laundering and the legislation was passed in South Africa because of South Africa’s obligations in terms of the United Nations Convention on trans -national organised crime.
In terms of the legislation, an accountable institution (which includes banks, estate agents and attorneys) may not establish a business relationship or conclude a transaction with a client unless the accountable institution has taken the prescribed steps to establish and verify the identity of the client and any agent acting on behalf of the client. An obligation is also imposed on accountable institutions to report suspicious transactions and they will, in the near future, be required to report any amounts of cash paid over a certain amount. The amount has not yet been determined by the Government.
As part of the prescribed rules to verify and identify the client, the accountable institution will be required to obtain and verify certain documents and/or information. In the case of a natural person this would include: -
a) Examining an original document confirming the person’s identity – this would be, for example, a South African identity document or a passport.
b) Examining some document confirming proof of residence such as a utility account, rates statement, lease agreement or the like.
c) Examining some document issued by the Receiver of Revenue giving the client’s income tax number (note that this requirement is not yet in operation).
In the case of companies, close corporations, trusts and other organisations, there are further requirements which will be more time consuming on the part of both the client and on behalf of the accountable institution.
All businesses, whether accountable institutions or not, are required to report all suspicious transactions to the Financial Intelligence Centre. There is a prescribed form for this but the reporting may be done electronically on their website. It will shortly be a requirement that all cash payments over a certain amount will have to be reported as well.
Should anyone fail to comply with obligations in terms of the Act then it and / or its employees will be liable to either a fine of up to R10 000 000,00 or to 15 years imprisonment or both. There is therefore a strong incentive to ensure that the law is followed correctly.
Further information may be obtained from the Financial Intelligence Centre website http://www.fic.gov.za.