The list of important acronyms you need to know just got a little bit longer. That’s because FICA, which stands for the Financial Intelligence Centre Act, has been added to that list. While you may have heard about it here and there, do you know what it is, and why it is important? Read on and find out more about why you need to know about FICA.
What is FICA?
FICA came into effect on 1 July 2001 to fight crimes such as money laundering, tax evasion, and other unlawful financial activities. This Act has put South Africa in line with similar legislation in other countries. FICA does not only help curb these illegal activities, but also helps to keep the money of South African citizens safe.
FICA aims to ensure that financial institutions know with whom they are doing business. In terms of FICA, financial institutions are required to preserve the paper trails of all transactions and are obliged to report any possible money laundering to the investigation authorities.
Are you FICA compliant?
For you to enjoy the protection that comes with FICA, it is important to ensure that you are FICA compliant. This simply means that you need to take your South African ID, and your proof of residence, like a municipal bill, that is less than three months old, to your nearest bank branch. You should also make sure to update any of your information should it change.
Is your business FICA compliant?
If you are a business owner, your business needs to be FICA compliant too. The FICA requirements for businesses differ depending on the entity. Each decision-making member of the company also needs to be compliant, and the business entity needs to be verified.
In addition to this, FICA also affects accountable institutions (defined in Schedule 1 of the Act). Some accountable institutions include the following:
- A person who carries on the business of making available a gambling activity in respect of which a license is required to be issued by the National Gambling Board or a provincial licensing authority.
- A person who carries on the business of dealing in foreign exchange.
- A person who carries on the business of lending money against the security of securities.
- A practitioner who practices as defined in section 1 of the Attorneys Act 53 of 1979.
These are a just a few of the accountable institutions – see a complete list here.
Accountable institutions are required to report any unusual or suspicious transactions. Examples of suspicious or unusual transactions include those that have no apparent business or other lawful purpose, as well as those that appear to be an evasion or attempted evasion of paying any tax, duty, or levy imposed by SARS.
What are the consequences of not being FICA compliant?
When you do not comply with FICA regulations, you stand the risk of exposing yourself to criminals who could potentially use your account to commit fraud. Should any criminal activity take place on your account, you could be locked out of your account, meaning you would have no access to your money. To fix this, you can take any relevant outstanding documents to your nearest bank.
If you want to find out more about FICA, and if you would like to check whether you are FICA compliant, you can visit your nearest bank branch.
Tip: Always ensure that your bank has your updated contact details and information. Then, if they ever need to contact you, the process of verifying your identity can be quick.
Businesses that fall under the definition of ‘accountable institution’ or ‘reporting institution’ (as defined in the Act) are required to formulate internal rules and processes, and to provide training to employees to ensure compliance with the FICA. Employees who have not received the necessary training should not be allowed to deal with clients of the business.
These types of businesses must also appoint a compliance officer to ensure that the business complies with FICA, and to ensure that they keep up to date with any changes in their obligations in terms of FICA. This is an important role, as some of the offences of not complying with FICA carry possible imprisonment terms of up to 15 years or fines of up to R100 million.
Read more about FICA here.
While there may be many acronyms you need to know, FICA is one of the important ones. This legislation seeks to curb illegal financial activity, and to protect your accounts and your money from possible fraudulent activities. As an individual, ensure that you are FICA compliant by taking the relevant documents to your nearest bank branch, and should you require more information, ask your bank.
If you work, or plan to work, in the financial field, consider studying the following short course to familiarise yourself with your obligations in terms of FICA: