The Financial Intelligence Centre Act 38 of 2001 (“the Act”) was proclaimed in order to combat money laundering activities and the financing of terrorist and related activities certain duties must be imposed on institutions and other persons who might be used for money laundering purposes and the financing of terrorist and related activities.

Legal persons, natural persons, partnerships and trusts must ensure that compliance is met in terms of this Act in order to maintain good business practice and to avoid penalties that may be incurred in the event of non-compliance.

In order to clarify matters, a few frequently asked questions have been answered below in order to assist in persons

in complying with the Act.


 

IS YOUR BUSINESS AN ACCOUNTABLE INSTITUTION?

 

Every legal entity, natural person and trust must inspect the list of Accountable Institutions in accordance with

Schedule 1 of the Act in order to ascertain whether it/they are accountable in terms of the Act.

 

FREQUENTLY ASKED QUESTIONS

  • whether copies of identification documents may be provided by a client;
  • whether certified copies may be provided by a client;
  • whether an identity document may be verified on a “face-to-face” basis;
  • whether in terms of verification the client may submit a certified copy of his driver’s licence as proof of identification;
  • what, in terms of the Regulations, is regarded as an acceptable proof of address;
  • whether the client needs to submit his registered tax number;
  • what is required in terms of the Regulations to grant a third party the necessary authority to act on behalf of the directors of a company;
  • may an individual director be FICA’d on behalf of all directors of a company;
  • whether in terms of the Regulations, an affidavit will be acceptable proof in the instance that the client is
  • unable to provide the required verification documentation;
  • what are the requirements regarding Foreign Nationals; and
  • what are the requirements regarding Foreign Companies?

THE QUESTIONS ANSWERED

May copies of identification documents be provided by the client?

A copy should not be provided, therefore, it is advised that a certified copy is obtained.

 

May certified copies be provided by the client?

Yes, certified copies will be the best way of verifying a client’s identity.

Certified copies of identity documents must be provided if the client is capable of arranging such a certified copy.

 

May an identity document be verified on a “face-to-face” basis?

In accordance with the FIC Guidance Note, Government Gazette, vol. 481, no. 27803 dated 18 July 2005, it is stipulated in the event that neither a certified copy nor an uncertified copy of the identity document is provided, it will be sufficient to ensure that the person dealing with the client on behalf of the Company has noted in the records that the identity document was a valid green bar-coded identity document of the client. It may then be recorded that the originals were sighted

(the same position applies to faxed documents).

 

May a certified copy of the client’s driver’s licence be submitted as proof of identification?

In accordance with the FIC Guidance Note, Government Gazette, vol. 481, no. 27803 dated 18 July 2005,

a certified copy may be provided (for a natural person) in the event that an identification document is not available.

It will be deemed sufficient if a person dealing with the client on behalf of the company has noted in the records

that the drivers licence was valid. It may then be recorded that the originals were sighted

(the same position applies to faxed documents).

 

What is regarded as an acceptable proof of address?

A utility bill (less than three months old) i.e. municipal rates and taxes invoices and/or a telephone account.

The documentation must reflect the physical address, however in the event that a postal address is reflected on the accounts as mentioned above, the address may be cross referenced if verbally given or if given in the form of a postal address by the client with the suburb reflected on the postal address (in accordance with the FIC Guidance Note, Government Gazette, vol. 481, no. 27803 dated 18 July 2005).

Alternatively an affidavit may be submitted.

 

Must the client submit his registered tax number?

Yes, the client (in the case of a legal person) must provide an income tax registration number as well as a value added tax registration number (if applicable) as obtained from the South African Revenue Services (“SARS”).

The client (in the case of a natural person) must provide an income tax registration number, if such a number has been issued to that person.

Provision of such a registered tax number submitted verbally, should be verified in terms of the Act and the Regulations by obtaining from the client with tax return documents issued by SARS (only the page on which the name, physical address and tax number appears will be sufficient).

 

What is required in terms of the Regulations to grant a third party the necessary authority to act on behalf of the directors of a company?

Authority of the third party must be verified by obtaining proof of the third party’s authority to act on behalf of the company

(in accordance with Regulation 17 of the Act and in accordance with the FIC Guidance Note, Government Gazette, vol. 481, no. 27803 dated 18 July 2005 , page 19);

 

authority may be proved by the following documents:

  • a power of attorney;
  • a mandate;
  • a resolution duly executed by the authorised signatories; or a court order authorising such third party to conduct business on behalf of the Company.
  • the full names, date of birth and identity number, as may be applicable, concerning each natural person who purports to be authorised to establish a business relationship or to enter into a transaction with the
  • accountable institution on behalf of the company.
  • The identity of the third party (natural person requirements) must be ascertained in accordance with the tables below.

May an individual director be FICA’d on behalf of all directors of a private and/or public company?

A company may appoint or direct a manager of a company (manager is defined as: a natural person who is the principal executive officer of the company by whatever name he/is she is designated, whether as a director or not).

Therefore, it can be established that a company may appoint/mandate and or authorise a manager to comply with the Acts requirements, thus authorise and/or appoint one director to be the director who will be FICA’d on behalf of the company when entering into business transactions (such a manager must submit his/her contact details and residential address).

However, in terms of the Act, Regulation7(1)(i) specifically specifies that:

In the case of a company, the residential address and contact particulars of:

  • the manager
  • each natural or legal person,partnership or trust holding 25% or more of the voting rights at a general meeting of The Company concerned; and
  • each natural person who purports to be authorised to establish a business relationship to enter into a transaction with the accountable insitution on behalf of the company.

Therefore, all directors and/or shareholders holding more than 25% in the company must also be FICA’d.

 

Whether in terms of the Regulations, an affidavit will be acceptable proof in the instance that the client is unable to provide the required verification documentation?

An employee of a company may visit the client’s named residential address and submit an affidavit that the address given by the client is the correct address, therefore the employee may depose thereto that the address is the correct address based on such viewing.

 

What are the requirements for Foreign Nationals?

Foreign Nationals in accordance with Regulation 5(1) and (2) of the Act, must provide their full names, date of birth, nationality, passport number, South African income tax registration number is such a number has been issued, and their residential address.

What are the requirements for Foreign Companies?

A foreign company in accordance with Regulation 9 of the Act must provide the constitutive documents reflecting the following:

 

a) the name under which it is incorporated;

b) the number under which it is incorporated;

c) the address where it is situated for purposes of its incorporation;

d) the name under which it conducts business in the country where it is incorporated;

e) the name under which it conducts business in the Republic;

f)  the address from which it operates in the country where it is incorporated, or if it operates from multiple addresses the

    address of its head office;

g) the address from which it operates in the Republic, or if it operates from multiple addresses the address of the office

    seeking to establish a business relationship or to enter into a single transaction with the accountable institution;

h) the income tax and value added tax registration numbers of the company, if such numbers were issued to that company;

i)  the full names, date of birth and identity number or full names, date of birth and name of the country, concerning –

 

i)  the manager in respect of its affairs in the Republic; and

ii) each natural person who purports to be authorised to establish a business relationship or to enter into a transaction

    with the accountable institution on behalf of the foreign company;

j)  details concerning each natural or legal person, partnership or trust holding 25% or more of the voting rights in the

    foreign company;

k) the residential address and contact particulars of –

 

i)   the manager (executive officer) in respect of its affairs in the Republic;

ii)  each natural or legal person or trust holding 25% or more of the voting rights in the company; and

iii) each natural person who purports to be authorised to establish a business relationship or to enter into a transaction

     with the accountable institution on behalf of the company.

 

Accordingly it is clear the person appointed as the manager of the foreign company as well as any natural persons (shareholders and/or directors) holding more than 25% of the voting rights in the company must be FICA’d.

Conclusion:

The Regulations of the Act outlines what is required in terms of legal persons, natural persons, trusts and partnerships, it is essential that one reads the information concerning the abovementioned but further that the verification requirements are met and applied accordingly.

 

The verification requirements aim towards and advise that information is verified by obtaining certified documents as a first course of action, after which the alternative methods such as affidavits may be used.

 

Compliance with the Act is essential when doing business in South Africa today if your business is deemed a financial institution. In cases where your business is not a financial institution it is advisable to FICA your clients or prospective clients as part of good business practice and record keeping.