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:
Accordingly, the following verification documents are required:
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:
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:
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:
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.