FICA is the Financial Intelligence Centre Act and is aimed at eliminating Money Laundering and financial fraud.
What is Money Laundering?
Money laundering is the process of transforming the proceeds of crime in order to conceal its unlawful origins into a seemingly legitimate status. Money that started out “dirty” ends up clean and sanitised, thereby hiding its immoral source and any proceeds of crime. It can be in any form of money or property or any other asset which can constitute a laundering offence.
What is FICA?
FICA compels “accountable institutions”, such as Estate Agents, Banks and Attorneys to physically identify and verify their customers.
Accountable institutions are also required by law to report “suspicious and unusual” transactions as well is any cash deposits in excess of R25,000.00 to the Government Financial Intelligence Centre. The Department also monitors the extent to which accountable institutions make reports.
What is required in order to be FICA’d as an individual?
Law therefore compels you to provide:
- Original ID book or passport;
- Proof of your residential address (not older than 3 months);
- Your marriage certificate and if applicable, your ante-nuptial contract;
- Your income tax number.
FICA and Conveyancing
The banks have chosen to appoint attorneys as their FICA agents, requiring attorney verification when bank documents are signed at attorneys’ offices; with the result a second request for FICA is deliberately intended; in accordance with bank policy.
Because the FICA process requires a verification of the identity of the client, party or customer,it is important to note that you cannot make your own copies, and cannot make your own arrangements to have a Commissioner of Oaths certify copies of your documents. It can only be done by an independent employee of the accountable institution, that you are dealing with.
As Estate Agents and conveyancers are required to manage multiple relationships, it is quite common for a conveyancer to have to FICA more than one party to a transaction. For instance:
- The seller
- the purchaser
- the prospective borrower (purchaser) at the instance of the bank;
- the existing borrower (seller) also at the instance of the existing bond holder.
The obligation of performing multiple FICA verifications takes up a lot of time, involves analysis, concentrated checking, photocopying; all of which is costly. Sometimes simply gathering this information from preoccupied clients can become a major undertaking. For instance, in the case of the Trust, each of the Trustees and each of the beneficiaries have to be verified. Similarly, in the case of the company, each of the Directors and shareholders have to be “fica’d”.
The banks take FICA very seriously and have set up specialist departments to record and classify the certified documents provided by their attorneys. For instance if their determined nitpick reveals a minor technical non compliance, the bank will withdraw its “proceed to register the bond” in the Deeds Office.
The effect of FICA
FICA has resulted in a reduction in all sorts of fraud; including the deposit of stolen cash or drug money into estate agent and attorneys’ trust accounts to be deviously hidden in the purchase of price of a property.
Numerous schemes involving the theft of someone else’s identity for the purpose of obtaining mortgage loans and purchasing property in that person’s name have been uncovered and/or prevented by FICA.
Penalties for non-compliance with FICA
There are severe penalties for not complying with FICA ; such as imprisonment for a period not exceeding 15 years or to a fine not exceeding ten million rand.