News from - Assist2Sell Somerset West
FICA AND IT’S IMPLICATIONS

After all the media hype last year encouraging people to become “FICA compliant”, the storm seems to have died down a little However, the implications of the Financial Intelligence Centre Act (FICA) are ongoing and will be a part of just about any financial transaction that we engage in.

The objectives of the Act are to “assist in the identification of the proceeds of unlawful activities and the combating of money laundering activities. Other objectives are to make information collected by it available to the investigating authorities, the intelligence services and the South African Revenue Service (SARS) to facilitate the administration and enforcement of the laws of the Republic, and to exchange information with similar bodies in other countries regarding money laundering activities and similar offences”. (WWW.acts.co.za/fica)

Apart from the banking implications which most of us have already encountered, the Act has substantial impact on property transactions, whether it’s the sale or purchase of a property, or a rental.

Estate agents, along with banks, are considered by the Act to be “accountable institutions” in dealing in transactions where money and property change hands.

As such, they are expected to apply KYC (Know Your Client) standards to buyers and sellers, and because there are up to five accountable institutions involved in a property transaction, you may be required to prove your identity and your address on several occasions during a property transaction.

The Act requires that the accountable institution verify a person’s identity face to face, with an original identity document, with certified copies of other supporting documentation supplied. These steps are taken to ensure that the parties in a property transaction are clearly identified, as is the source of the money involved, to prevent money laundering or tax evasion.

Home owners should also be aware of suspicious events around a property transaction, as their money or the transfer of their new home may be jeopardized if a deal is found to be suspect. Things to look out for include prices that are in excess of or substantially less than prevailing market prices, vague or contradictory references, a party that has no record of employment or involvement in a business but engages in large transactions or requests that a transaction be completed in a foreign currency.

A further point worth noting is that the FICA regulations are linked closely to SARS. If your tax returns are not up to date, SARS can prevent the deal going through until all obligations in terms of taxation are met.

It’s best to work with your estate agent or bank in meeting these requirements, as they could face penalties of up to five years’ imprisonment or fines of R1 million for non-compliance or failure to report anything suspicious. If you’re unsure of the implications that FICA may have on your property transactions, or on your business, you can visit www.fic.gov.za or contact the Estate Agency Affairs Board on www.eaab.org.za. FNB also has a great site outlining the implications for various individuals, legal persons and organizations – visit https://www.fnb.co.za/legallinks/legal/fica.html.

Article by: www.assist2sellproperties.co.za