Over the past few years, South African consumers (whether natural persons or entities) have become used to ”being fica-ed” when we enter into certain transactions. We are not alone in this: our financial intelligence laws were promulgated after South Africa became a member of the Financial Action Task Force, an intergovernmental organization established on the initiative of the G7 countries, to develop policies to combat money laundering and terrorist financing in member countries.
The Financial Intelligence Centre Act of 2001 (the FIC Act) was thereafter finally adopted in November 2001 and became operational in increments from 2002 onwards. Some parts of the Act only became operational in 2010.
Important amendments to the FIC Act were passed recently, many of which kicked into effect on 2 October. The changes are substantial and require from accountable institutions (such as attorneys, estate agents, financial advisors, banks) to adopt a risk policy when fica-ing clients. The tick-box approach to collecting a set list of documents from clients (for example, the ‘usual’ requests for a copy of your ID document, proof of address and income tax number for natural persons) may no longer necessarily be adequate. Institutions much adopt a risk policy and in terms thereof, decide what they will require from clients in order to be compliant with their duties in terms if the FIC Act.
In addition to this change in approach to compliance, note:
- where a company, trust or partnership is involved in a transaction, the accountable institution must ascertain the identity of the beneficial owner of the entity. In layman’s terms this means the identity of the person who ultimately ‘pushes the buttons’ or who ‘has the final say’ must be ascertained; and
- where an individual is a client and that individual is a “domestic prominent influential person” (or close relation or family member of such person) or a “foreign prominent public official” as these are defined in the Act, increased due diligence is required and senior management approval must be obtained before one may do business with this person.
