Unit trust investors and bank clients will have to be patient with their banks and unit trust companies once the Financial Intelligence Centre Act (Fica) comes into effect.
From Monday, June 30, you will have to provide a bank with additional personal information when you open an account. And banks will be legally obliged to report any suspicious or unusual transactions involving your account.
This is a result of the introduction of Fica, which aims to bring South Africa into line with international standards of combating money-laundering and identifying the proceeds of unlawful activities.
Fica imposes strict duties on institutions and their employees when they encounter suspected money-laundering.
A Financial Intelligence Centre was established in February to receive and analyse reports of suspicious and unusual financial transactions.
Claire Gebhardt-Mann, a spokesperson for the Banking Council, says that in terms of Fica, a bank:
- May not enter into a relationship or transact with you until it has established and verified your identity;
- Must establish and verify the identity, and authority, of clients acting on behalf of other persons, as well as those who act on behalf of a client;
- Must keep records of all business relationships and financial transactions;
- Must report any suspicious and unusual transactions to the Financial Intelligence Centre. Such transactions include suspected money-laundering, tax evasion and breaches of the exchange control regulations; and
- Must ensure that all staff are familiar with their legal obligations.
The obligation on banks to provide information to the Financial Intelligence Centre overrides any bank-client confidentiality agreements.
Penalties for failing to comply with the Act range from five years' imprisonment (or a fine of R1 million) to 15 years' imprisonment (or a fine of R10 million).
Fica also obliges banks to re-identify their clients within a year, starting on July 1, 2003. Banks will, therefore, be updating their client files to meet the new requirements.
The Association of Collective Investments has also implemented new measures to comply with Fica, according to Di Turpin, the association's executive vice-chairperson.
The association will be asking investors and brokers to verify the identities of new investors upfront so that in the event of a withdrawal request, investors can access their money within 24 hours.
Financial advisers will have to verify their clients' personal details and obtain copies of identity documents or passports. Advisers will have to verify your income tax registration number with the South African Revenue Service. They will also have to maintain detailed records of your transactions for at least five years. Most advisers already do so, Turpin says.