The Financial Intelligence Centre and a Money Laundering Advisory Council was established to prevent the financial system from being used to hide the financial proceeds of crime. FICA defines ‘money laundering’ or ‘money laundering activity’ to mean an activity which has or is likely to have the effect of concealing or disguising the nature, source, location, disposition or movement of the proceeds of unlawful activities or any interest which anyone has in such proceeds. Criminals need cash, so they turn their “dirty money” made from drugs, robberies, fraud, etc. into “clean money” by, for example, using the identities of innocent people.
FICA creates money laundering control obligations for banks, estate agents, attorneys, insurance companies, car dealerships, and other financial institutions. If you have not verified your details with your bank, they are required by law to freeze your accounts until you have complied with the law. Any organisation (or member of the organisation, or individual/customer) that fails to comply with this Act will face severe penalties like 5 -15 years imprisonment or an extensive fine amounting, literally, to millions of Rands.
One of the major elements of the financial institutions’ obligation is to know their client. In short clients need to be identified by the use of their green bar coded identity book, and they have to prove where they live. This is usually done by means of a utility bill, which is addressed to you at your physical address. If you are renting, you need a copy of the lease agreement, or if you stay with parents/guardians you need to supply a confirmation letter. Some institutions provide a form, for the owner of the property on which you reside, to confirm that you are living there. Make sure it is signed, and attach a copy of this person’s ID and relevant utility bill. You may also be asked to provide your tax registration number, if such a number has been issued to you.
Due to the additional time and paperwork required for this verification, professionals like attorneys are charging for this service. When purchasing a house you will see on the breakdown of your attorney’s fees a line entry for FICA Verification.
Please be patient with the staff of financial institutions, attorneys, estate agencies, car dealerships, and so on. when you are asked to provide documentation for FICA purposes. (Not only when applying for a home loan or vehicle finance, but even when you just collect a credit card). They are required by law to ask this of you, and the ramifications if they fail to do this and do not comply with the law, are severe.
For more information on FICA, visit the Financial Intelligence Centre’s website at www.fic.gov.za.
This article originally appeared in Property Power 11th Edition Magazine. To order your copy at the discounted price of R120 click here