Understanding FICA: Why compliance is crucial for property transactions
Category News
By now, you are probably well aware of the need to "FICA" every time you change your cell phone or apply for credit, or make large cash deposits.
READ: Avoid these 'sophisticated scams' meant to fleece buyers, sellers and prospective tenants
FICA has become an important aspect of our daily lives and also affects the selling and letting of property, and there are onerous requirements pertaining to FICA when it comes to property transactions.
Tiaan Pretorius, manager of Seeff Centurion says "FICA" is the abbreviation that is used to refer to the Financial Intelligence Centre Act of 38 of 2001 which was amended in 2017. It is part of a host of legislation aimed at assisting in the prevention of money laundering, fraud, tax evasion and identity theft.
Under the FIC Act property practitioners (estate agents) are specifically mentioned by name as being "reportable institutions" with various obligations with regard to FICA with responsibility around identification of their clients as well as having their own risk management and compliance programmes.
Pretorius says estate agents must be able to verify and identify their clients. They also need to keep records of their clients while still being POPIA (Protection of Personal Information Act) compliant.
READ: Agents and clients | Safety measures to consider when selling and letting homes
The estate agency business for example must appoint a compliance officer, and register themselves with the FIC (Financial Intelligence Centre). It must also create its own risk and compliance programme and train its employees and agents on it. Estate agents are also obliged to report all transactions which meet the reporting threshold and those which appear to be suspect in nature.
The FICA requirements pertaining to verifying clients apply across the board, from sellers and buyers to landlords and tenants, he says further. The property practitioner will request clients to provide them with proof of their identity as well as proof of residence. Other documents that they can provide to assist in making sure their transactions proceed timeously are documents from SARS confirming their tax number and documents confirming their marriage status such as a marriage certificate if applicable.
READ: Tax guide and property transaction | Everything you need to know
Other than it being a legal requirement that forms part of a property practitioners' duty, Pretorius says compliance with FICA also protects the agent and business. The wider impact is that it ensures protection for the local economy not to be black listed from using international financial systems, and reduces the capabilities of criminals and terrorists to use the formal economy and financial systems to continue to pose a danger to others.
Author: Property24