FICA compliance crucial for property transactions

By now, you are probably well aware of the need to “FICA” every time you change your cellphone or apply for credit, or make large cash deposits.

FICA has become an important aspect of our daily lives and also affects the selling and letting of property, and there are onerous requirements about FICA when it comes to property transactions.

Tiaan Pretorius, manager of Seeff Centurion said that 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 FICA Act property practitioners (estate agents) are specifically mentioned by name as being “reportable institutions” with various obligations about FICA with responsibility around identification of their clients as well as having their own risk management and compliance programmes.

Pretorius said 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.

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 suspicious.

“The FICA requirements about verifying clients apply across the board, from sellers and buyers to landlords and tenants,” he said.

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.

Other than it being a legal requirement that forms part of a property practitioner’s duty, Pretorius said compliance with FICA also protects the agent and business.

“The wider impact is that it ensures protection for the local economy not to be blacklisted 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.”