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Commercial Law

FICA, ACT 38 OF 2001

By 29/08/2009 No Comments

FINANCIAL INTELLIGENCE CENTRE ACT

(FICA, ACT 38 OF 2001)

Money laundering has been one of the more difficult of the organised crimes to track as its defining feature is to eliminate all traces of its point of origin.

In order to curb this crime and protect its economy’s legal viability, Parliament has enacted two prominent acts being:

  • Prevention of Organised Crime Act, Act 121 of 1998 ( POCA)

  • Financial Intelligence Centre Act, Act 38 2001 (FICA)

POCA deals with the elements of money laundering and the penalties imposed on offending persons.

FICA creates the administrative processes that accountable institutions must implement and follow in order to avoid being involved in money laundering.

In order to ascertain if you, or your business need to comply with FICA, you need to peruse Schedule 1 of the Act which lists the following entities as accountable institutions:

  • An attorney as defined in the Attorneys Act, Act 53 of 1979;

  • A board of executors or a trust company or any other person that invests, keeps in safe custody, controls or administers trust property within the meaning of the Trust Property Control Act, Act 57 of 1988;

  • An estate agent as defined in the Estate Agents Act, Act 112 of 1976;

  • A financial instrument trader as defined in the Financial Markets Control Act, Act 55 of 1989;

  • A person who carries on the “ business of a bank” as defined in the Banks Act, Act 94 of 1990;

  • A management company registered in terms of the Unit Trusts Control Act, Act 54 of 1981.

Once you have established that you, or your business is an accountable institution, you have to work towards becoming FICA Compliant by:

  • Formulating and implementing Internal Rules and Procedures;

  • Appointing a compliance officer;

  • Updating and verifying your existing clients information;

  • Verifying ever new client’s information;

  • Educating your employees about FICA, eg Training;

  • Keeping and storing your clients’ records and the details of their transactions.

FICA stresses the importance of sourcing as much information and proof of identification from your clients as possible and give minimum guidelines eg:

  • Natural Person

Information

Documentation

Full Name

Identity Number / Passport Number

Certified copy of ID

Tax Details if Possible,

Tax Return

Residential Address,

Proof of Residence e.g. Utilities bill

In the event that the client is assisted by another, eg a guardian, that person’s details must also be obtained.

  • Close Company

Information

Documentation

Registered Name

CK 1 / CK 2 / CIPRO printout

Registration Number

Registered Address

Trade Name

Original letterhead

Address from which it conducts business and address of head office

Proof of Address

Details of Members

Same as required from a natural person

Details of Person acting on behalf of CC

Same as required from a natural person + resolution on behalf of CC

In order to enforce compliance, FICA provides for penalties for those who have not adhered to its provisions which range from not more than 15 years imprisonment to fines of R 1 000 000.00.

Ian Mc Laren

Ian Mc Laren

Ian McLaren BA LLB (WITS) General Educated St Johns College, Houghton. BA LLB University of the Witwatersrand 1984 Founded McLarens Attorneys September 1986. Right of Appearance High Court, October 1996. Expertise Litigation, Labour Law, Commercial Law, Family Law, Pension and Provident Funds, Customs and Excise, Wills, Deceased Estates, Trusts, Commercial Agreements, Reviewing and Drafting Government Legislation, Information Technology. Committees/ Trusts Law Society of South Africa Information Technology Committee. Trustee Verney College Educational Trust Other Transvaal Provincial colours for Practical Shooting. Third degree Black Belt JKS Karate. Photographer and motor cyclist Lectured for Continuing Legal Education on Information Technology issues.