Everything you need to know about FICA
Category Commercial and Industrial News
There can't be many South Africans who haven't come across FICA and the need for compliance, either in their personal or business affairs. FICA, or the Financial Intelligence Centre Act, is a legal framework set up in an effort to identify the proceeds of unlawful activities and to attempt to put a stop to money laundering and terrorist financing. It is partly due to international concern about South Africa's response to the threat of financial crimes that has led to our country's greylisting. 3Cube Property Solutions takes a close look at FICA and everything you need to know about this legislative framework.
First things first: why is FICA necessary
FICA exists to help authorities identify the proceeds of illegal activities such as money laundering and to prevent the financing of terrorism and related activities. It achieves this by implementing a number of strict rules to which all accountable institutions must adhere.
Who has to comply with FICA?
If your business is classified as an "accountable institution", then FICA applies to you. To provide just a few examples from the long list, an accountable institution could be a trust company that controls or administers trust property. It could also be a person who carries on the business of a bank, a foreign exchange dealer or a business that lends money against securities. The impact of FICA also extends to any natural person who engages the services of an accountable institution.
Key points of the act
In a nutshell, accountable institutions are required to know who they are doing business with. Each client must be identified and verified in order to prevent criminal activity. Records of all information pertaining to character verification need to be kept (either physically or electronically) for at least five years from the date of the transaction or the termination of the business relationship.
As part of the fight against organised crime, FICA stipulates that accountable and reporting institutions are obliged to report any suspicious behaviour or transaction. This includes any cash transaction higher than a certain threshold. Over and above this, any transaction or client activity that seems suspicious must be reported. There is also another kind of report that must be submitted if you suspect that a client of yours may possess or control property with links to terrorism.
The minutiae of customer due diligence
In order to adequately perform due diligence, you'll need to collect and evaluate specific information. For a start, you'll need to verify the person or entity and their location. You'll need to know what your client's economic sector is and what the purpose of their relationship with you is. You also need to monitor transactions on an ongoing basis and identify whether your client or any related party is on a sanctions list.
Some important FICA requirements at a glance
- A compliance officer needs to be officially appointed by senior management/directors of an accountable institution.
- Accountable institutions must register with the Financial Intelligence Centre. This can be done using the FIC's online system.
- Accountable institutions must develop controls to mitigate money laundering risks. These controls should become an integral part of the company's risk management and compliance programme.
- Ongoing training must be given to employees of accountable institutions to ensure compliance with FICA provisions.
Compliance with FICA's requirements is a non-negotiable for accountable institutions. Having the right premises is a non-negotiable for every business. If you need premises for your industrial, commercial or retail enterprise in Gauteng or the Western Cape, get in touch with 3Cube Property Solutions.
Author: 3Cube Property Solutions
