Know your obligations in terms of the Financial Intelligence Centre Act

Riane Barnard and Trisa Naidu review the obligations of accountable institutions in terms of the FICA legislation:

Financial crimes such as money laundering activities, tax evasion and the financing of terrorist and related activities pose a large burden on private individuals, businesses and financial institutions. The need for an effective policy and compliance framework is therefore crucial. Fortunately, the law initially established the Financial Action Task Force (“FATF”), who together with the international environment eventually put pressure on the development of the Financial Intelligence Centre Act 38 of 2001 (“the FICA”). FICA therefore provides persons with the necessary framework in order to identify, criminalise and combat these crimes. In addition, it enables South Africa to comply with its international obligations to fight against organised crimes and terrorism.

FICA places a duty on accountable institutions by means of creating money laundry control obligations to which they have to comply with. In today’s globalized economy, the duty of “accountable institutions” is defined in Schedule 1 of FICA as any person or organisation. In addition to affecting an accountable institution, FICA affects all customers and trusts entering into a business relationship with the institution.

The Money Laundering and Terrorist Financing Control Regulations require customers to provide certain information and documents verifying such information to the accountable institution. These verifying documents must be the original or an original certified copy.

Firstly, if the customer is a natural person, the following information must be provided by the individual:

• Full Names
• Date of Birth
• Identity Number
• Current Residential Address
• Income Tax Registration Number, if such a number has been issued to that person.

Accordingly, the following verification documents are required:

• The first three points are to be confirmed by the green, barcoded identity document of a South African resident. A foreign individual resident requires a valid passport which provides their passport number and nationality.
• The current residential address, stating the individual’s name and full residential address must be confirmed by recent documentation. A postal address does not verify such address. Examples of documents acceptable for FICA purposes are utility bills, bank and financial statements, telephone or retail accounts, not older than three months old or a signed lease agreement or official tax return not older than one year old.
• The income tax registration number must be verified with reference to a document, which stipulates the number and the name of the individual, issued by the South African Revenue Service (SARS).

If the customer is a legal person/entity, the following information must be provided by the natural person acting or purporting to act on behalf of the close corporation (CC) or company:

• Registered Name
• Registration Number under which the CC or company is incorporated
• Registered Address
• Trade Name
• Physical Business Address
• Income Tax & Value Added Tax Registration Numbers, if such number has been issued to that CC or company
• In the case of a close corporation, the full names, date of birth and identity number, of the natural person regarding each member
• In the case of a company, the full names, date of birth and identity number, of the natural person regarding the manager of the company
• In the case of a company, the full information required of a natural person and legal person must be provided where a partnership, trust, legal or natural person holds 25% or more of the voting rights at a general meeting of the company

Accordingly, the information provided must be verified by the following documentation:

The first three points are to be confirmed by the most recent versions of the:

• Certificate of Incorporation and Notice of Registered Office and Postal Address, in the case the customer is a company; or
• Founding Statement and Certificate of Incorporation, and Amended Founding Statement (if applicable), in the case the customer is a CC.

The points thereafter must be confirmed by the documentation as to be provided by natural persons.

Lastly, if the customer is a trust, the following information must be provided by the natural person acting or purporting to act on behalf of the trust:

• Trust Name
• Trust Number
• Beneficiary Names
• List of the Authorised Trustees
• Address of the Master of the High Court in which the trust is registered
• Income Tax Registration Number, if such number has been issued to that trust
• The full names, date of birth and identity number of the trustees, beneficiaries, authorised signatories, founder and persons who act on behalf of the trust
• Residential Address of every trustee, founder and beneficiary

Accordingly, the information provided must be verified by the following documentation:

The first four points are to be confirmed by the Trust Deed or other founding document. In addition, the Letters of Authority or Masters Certificate.

The points thereafter must be confirmed by the documentation as to be provided by natural persons.

Identifying the customer is an important step in establishing a business relationship with the accountable institution. It is therefore imperative that the customer knows its obligations in terms of FICA, subsequently combating financial crimes.