Money laundering

Private Property South Africa
Lea Jacobs

If truth be told, banks, lawyers, cell phone companies and indeed any company offering accounts must be drowning under a barrage of paperwork. South Africahas strict laws aimed at reducing money laundering and crime and as such, law abiding citizens have to supply a wealth of personal documentation at every turn.

The Financial Intelligence Centre Act (FICA) was implemented to help stop money laundering. This crime, which has become a major problem worldwide, has been going on for years. The phrase ‘money laundering’ was coined during the height of Mob activity in theUSA. The Mafia was known to invest in high turnover, cash-based businesses such as laundrettes and car washes and mix the ‘dirty’ money with ‘clean’ money which had been legally generated, adding legitimacy to the ill-gotten gains.

These days the process has become far more sophisticated and it is estimated that approximately R1.5 trillion dollars is laundered worldwide on an annual basis. Most, if not all, countries have stepped in and have implemented strict rules regarding the movement of cash in an effort to combat this growing problem.

FICA was introduced inSouth Africain 2001 and has undoubtedly made life more difficult for everyone. Our financial affairs are closely scrutinised and cash deals amounting to anything over R25 000 have to be reported to FICA. It doesn’t stop there and anyone entering into a substantial financial agreement has to provide a plethora of documentation, proving that they are who they say they are and that they have derived the income in a legal manner. Any banking institution, lawyer or estate agent, to name just three, who does not collect the right documentation and proof of identity is liable to a fine of R10-million and/or a term in jail.

When concluding a sale, buyers and sellers have to provide certain documents which could include a certified copy of their ID and proof of residence. If an agent is suspicious of a buyer or seller’s actions, they are obligated to report such a person to the Financial Intelligence Centre (FIC).

Believe it or not, not so long ago there were people who would walk into a real estate office with a briefcase full of money and either buy a property for cash or put down a hefty deposit. No one batted an eyelid. Property is an expensive commodity and it was the ideal way for unscrupulous individuals to dispose of large sums of illegally-obtained money. Once the buyer owned the property and went on to sell for a substantial profit, it was all but impossible to trace the original source of the money.

Even if an agent is unscrupulous, there are numerous checks and balances in place. The buyer has to supply the same documentation to the conveyancing attorney and also has to supply his tax number before the transfer will be effected by the Deeds Office.

Strangely enough, although these rules have been in place for over 10 years, there are buyers and sellers who balk at the idea of handing over personal information to an agent. Realistically, this doesn’t make sense as the deal may not be concluded until every aspect of FICA has been fulfilled.

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