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Under Fica, estate agents are obligated to establish and verify the identity of their clients before concluding financial transactions with them.
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When buying or selling property, estate agents usually ask many questions about your financial position.
This can be headache for many people, however, there is a compelling reason why this is done.
Paul Stevens, CEO of Just Property, said many people are puzzled when they realise how many personal details are required. But there is a clear reason behind the requests for identification documents, proof of address and financial records.
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The Financial Intelligence Centre Act (Fica) was introduced in July 2003 to fight financial crimes such as money laundering, tax evasion, terrorist activities and financing of weapons of mass destruction.
“How, you may ask, does this have anything to do with me buying or selling my property?”
Stevens said that before the introduction of Fica, the real estate sector was susceptible to financial crimes, especially money laundering and terrorism financing risks, because criminals were able to use property transactions as a means to easily integrate illicit funds into the legal economy, while creating a safe and often lucrative investment for themselves.
He adds that under Fica, estate agents are obligated to establish and verify the identity of their clients before concluding financial transactions with them.
“This means that without Fica verification an agent may not accept a mandate from a seller, nor may they conclude a sale agreement. If they do not comply, then they face penalties and legal consequences.”
Common documents requested:
“If you are self-employed or run your own business, you may have to supply the agent with supplementary information.”
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Stevens said that personal details of clients will be kept safe as estate agents are bound by strict confidentiality. “Your documents will only be shared with necessary parties, such as the conveyancing attorney handling the sale of the property or the bank processing your bond.”
He highlighted that in 2024, the Financial Intelligence Centre (FIC) updated its risk assessment guidelines for legal practitioners and estate agents, significantly expanding the risk factors estate agents must consider in property transactions.
“The revised guidelines, based on insights from the Financial Action Task Force and regulatory reports, outline 13 key risk indicators.
“These include clients refusing to provide identification, accepting third-party payments from jurisdictions with weak anti-money laundering controls, and tenants hesitating to grant agents access to rental properties.”
Stevens added that the Financial Action Task Force and regulatory reports also highlight the connection between financial crimes and high-value properties, emphasising geographic risks.
“For example, estate agents operating in affluent areas such as Franschhoek, Stellenbosch, Cape Town’s Atlantic Seaboard and Constantia are advised to implement stricter measures to mitigate money laundering and terrorist financing risks.”
In accordance with the above and with the rules set down by the Property Practitioners Regulatory Body (PPRA) and Fica, estate agents are obliged to report any suspicious or unusual transactions to FIC.
“Such transactions could include reluctance to provide information, unusual funding sources and transactions that appear to be above the client’s means.
“Deposits paid by third parties and purchases made in the name of third parties are also red flags.”
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