Anyone who has ever tried to open a bank account, get a loan, enable internet banking, and almost anything to do with a bank account has experienced the ‘FICA’ hassle: proof of residence, proof of salary, ID document, etc.

These requirements do not come from the banks; be grateful for the nuisance, and be patient with your bank. The ‘FICA’ system is one of Government’s measures to combat money laundering, and the use of illegally-acquired cash to finance terrorism and similar activities.

The Financial Intelligence Centre Act 20011 established exactly such a Centre. Its function is to gather, process, analyse and interpret information and to make the information available to the enforcement and revenue authorities both in the Republic and elsewhere.

To make the Centre’s function meaningful, strict compliance provisions have been legislated in the Act.

A. Accountable institutions and client records

  1. Schedule 1 to the Act lists the ‘institutions’ with obligations of reporting information to the Centre. These include, amongst others:
    • attorneys
    • banks
    • forex dealers
    • trust companies
    • insurers
    • money lenders
    • estate agents
    • gambling houses
    • financial services providers.
  2. Every accountable institution, and every motor vehicle dealer, and every person who deals in Kruger Rands, must register with the Centre. Any such entity which fails to do so is guilty of an offence.

  3. Any such entity which, when it registers, fails to furnish any information required by the Centre also commits an offence.2

  4. An accountable institution commits a criminal offence if it makes an arrangement with a client for the purpose of concluding transactions on a regular basis (that is, a ‘business relationship’), or concludes a single transaction with a client, unless it has taken steps:
    • to establish and verify the identity of the client; and
    • if the client is acting on behalf of another person, to establish and verify his authority, as well as the identity of that other person;
    • if another person is acting on behalf of the client, to establish and verify his identity and authority to act on behalf of the client.
  5. If an accountable institution had established a business relationship with a client before 30 June 2004, it may not conclude any further transaction in that relationship unless it goes through the same steps; plus, trace all accounts involved in transactions concluded in the course of that business relationship. It is a criminal offence to fail to do any of these.

  6. Whenever an accountable institution establishes a business relationship, or concludes even a single transaction with a client, it must keep record (in hard copy or electronic) of:
    • the identity and authority as explained above;
    • the manner in which the identities were established;
    • the nature of that business relationship or transaction;
    • the amount involved and, the parties to the transaction;
    • all accounts that are involved in transactions concluded in the course of that business relationship;
    • all accounts involved in that single transaction;
    • the name of the person who obtained all this information on behalf of the accountable institution; and
    • any document obtained in order to verify the identities.

    It is an offence to fail to do any of this.3

  7. Those records must be kept for, at least, five years:
    • if they relate to the establishment of a business relationship, from the date on which the relationship is terminated;
    • if they relate to a transaction which is concluded, from the date on which that transaction is concluded.

    It is an offence to fail to do so.4

  8. It is permissible for the records to be kept by a third party. However, the accountable institution commits an offence if it does not, forthwith, provide the Centre with certain particulars regarding the third party.5

  9. It is a crime either to tamper with, or permanently destroy those records.6

  10. Any authorised representative of the Centre can access those records during ordinary working hours if he has a warrant issued by a judge or magistrate. He may examine them, make extracts or copies. It is a criminal offence if the accountable institution fails, without delay, to give all reasonable assistance to that representative.7

B. Reporting duties

  1. The Centre can ask any accountable institution whether a specified person is or has been a client, or that person has represented any client, or any client has represented that person. It is an offence not to inform the Centre accordingly.8

  2. An accountable institution and motor vehicle dealers, and anyone who deals in Kruger Rands must, not later than two days of becoming aware of the transaction, report to the Centre any transaction concluded with a client involving an amount of cash in the amount of R25 000,00 or more,9 and:
    • is paid by it to; or
    • is received by it from, the client, or from a person acting on behalf of the client, or from a person on whose behalf the client is acting.10
  3. If an accountable institution has property owned or controlled by an entity connected to a specified offence as defined in the Protection Against Terrorism Act,11 or a specific entity identified in a notice issued by the President under that Act, it commits a crime if it does not report this to the Centre within five days.12

  4. The Director of the Centre may direct an accountable institution which has made such a report, to make further reports and it is a crime not to do so.13

  5. Any owner, manager or employee of a business who knows (or ought to have known, or even suspected) that the business has received, or is about to receive either:
    • the proceeds of unlawful activity; or
    • property connected to the financing of terrorists and related activities, commits a crime if he does not report all of this to the Centre within 15 days.14
  6. If such a person knows (or even suspects) that a transaction in which the business is involved relates to any of the following, he must similarly report it to the Centre and commits a crime if he does not do so:
    • facilitating the transfer of proceeds of unlawful activities;
    • facilitating the transfer of property connected to the financing of terrorist and related activities;
    • if the transaction has no apparent business or lawful purpose;
    • if it is to avoid any duty to report in terms of FICA;
    • the evasion of tax, duties and levies administered by SARS;
    • the financing of terrorist and related activities.15
  7. If such a person knows or suspects that the business has been or will be used, in any way, for money laundering or for purposes relating to the financing of terrorist and related activities, he must similarly report this to the Centre – and commits a crime by not doing so.16

  8. The person who made (or must make) the report must not17 disclose that fact, or any information regarding the contents of any such report, to any other person and commits a criminal offence if he does.18

  9. It is forbidden, even, for any person who knows or suspects that a report has been (or is to be) made to disclose that knowledge or suspicion (or any information about the report) to any other person and it is a criminal offence to do so.19

  10. Anyone who intends taking or transferring R25 000,00 or more out of, or into, the Republic in cash (or cashable cheques, money orders, etc.) must report that to the Minister of Finance, and it is an offence not to do so.20

  11. If an accountable institution sends out of, or receives money from outside, the Republic by electronic transfer in an amount of R25 000,00 or more, it must report the transfer to the Centre, and commits a crime by failing in this obligation.21

  12. Any person who effects two or more transactions in order to avoid having to lodge any report under the Act commits an offence.22

C. Powers of the Centre

  1. The Centre, or an authorised investigating authority, may request any person who has made one of the aforementioned reports to furnish additional information. That person commits an offence if it fails to comply with the request.23

  2. If the Centre has reasonable grounds to suspect that a transaction (or a proposed transaction) may be contrary to the objects protected by the Act (terrorism financing, money laundering, tax evasion, etc.) it may direct the person not to proceed with the transaction in order to allow the Centre to make inquiries and even inform enforcement authorities. Obviously, it is an offence not to comply with such a directive.24

  3. A judge of the High Court may, if there are reasonable grounds to suspect conduct contrary to the objects of the Act, order an accountable institution to report to the Centre all transactions concluded with a specified person or in respect of a specified account. An institution that fails to comply with such an order commits an offence.25

D. Access to information

  1. Information held by the Centre is guarded, and access will be given only to certain entities under certain conditions. Any information obtained from the Centre is treated as confidential, and it is a criminal offence:
    • to use the information for a purpose other than that specified in the request for the information;
    • to disclose it except for legal proceedings, or if ordered by a court, or with the permission of the Centre, or to carry out the provisions of any legislation;
    • to use it except according to the arrangements and safeguards imposed by the Director of the Centre to maintain its confidentiability.26
  2. It is a crime to destroy or tamper with information kept by the Centre.27

  3. If any persons knows (or even ought to suspect) that information has been disclosed to the Centre, or that an investigation is being conducted as a result of information disclosed to the Centre, he commits a criminal offence if he alerts another person or gives him information likely to prejudice the investigation.28

  4. Any person who accesses (or persuades another person to access) any computer system (or application or data) of the Centre, or causes it to perform any function, without authority, commits a crime.29

  5. Any person who causes such computer to crash, or to be modified or impaired, is guilty of an offence.30

  6. Any person who causes any application or data or the computer system to be destroyed, erased or impaired is guilty of an offence.31

E. Internal rules, training and compliance

  1. An accountable institution must formulate and implement rules concerning, at least:
    • the establishment and verification of the identity of clients;
    • the information to be kept;
    • the manner in which and place where records must be kept; and
    • the steps to determine when a transaction is reportable.

    There are also prescribed requirements for these internal rules.32 It is an offence if an accountable institution fails to comply with these obligations.33

  2. The rules must be made available to each employee involved in transactions to which the Act applies. It is against the law not to do so.34

  3. If requested, an accountable institution must also make a copy of its internal rules available to the Centre or any supervisory body which performs regulatory or supervisory functions in respect of that accountable institution, and it is a crime to fail to comply with such a request.35

  4. An accountable institution must also provide training to its employees to enable them to comply with the provisions of the Act, and the internal rules, and it breaks the law if it does not do so.36

  5. Similarly, it commits a crime if it does not appoint a person to ensure compliance by employees and the accountable institution with the provisions of the Act and the internal rules (that is, a ‘compliance officer’).37

  6. The Centre (or a supervisory body) may issue a directive, to anyone, to provide information, reports or statistical returns and anyone who fails to comply with such a directive commits a criminal offence.38

F. Inspections and inquiries

  1. An inspector appointed by the Director (or a supervisory body) may, at any reasonable time and on reasonable notice, enter and inspect any premises of an accountable institution, or a vehicle or Kruger Rand dealer. He may direct any person to appear for questioning and it is an offence to fail to appear for questioning.39

  2. An inspector may also order any person to produce documents and to furnish information in respect of the documents. It is a criminal offence to fail to comply with such an order, and also to give false information to an inspector.40

  3. It is also a crime to:
    • disobey any reasonable request by an inspector; or
    • obstruct an inspector in the performance of his duties.41
  4. It is an offence to obstruct, or threaten an official or representative of the Centre in the performance of his duties.42

  5. It is an offence, if summoned to give evidence or produce anything at an inquiry:
    • to fail to appear;
    • to remain in attendance until excused;
    • to refuse to take an oath or affirmation;
    • to fail to produce anything as ordered;
    • not to answer questions fully; and
    • to give false evidence.43
  1. As amended; the latest amendment was effected by Act 11 of 2013. 

  2. Section 46(1) read with section 21(1). 

  3. Section 47 read with section 22(1). 

  4. Section 47 read with section 23 and section 24(1). 

  5. Section 47 read with section 24(1). 

  6. Section 48. 

  7. Section 49 read with section 26(5). 

  8. Section 50 read with section 27. 

  9. Section 22(B) of the Money Laundering and Terrorist Financing Control Regulations, 2002 (as amended) – the ‘Money Laundering Regulations’. 

  10. Section 51 read with section 28. 

  11. The Protection of Constitutional Democracy against Terrorist and Related Activities Act, 2004. 

  12. Section 51A read with section 28A. 

  13. Section 51A(2) read with section 28A(2). 

  14. Section 52(1) read with section 29. 

  15. Section 52(2) read with section 29. 

  16. Section 52 read with section 29(1)(c). 

  17. Except if required by statutory duties, the provisions of the Act, legal proceedings, or an order of court. 

  18. Section 53(1) read with section 29(3). 

  19. Section 53(2) read with section 29(4). 

  20. Section 54 read with section 30(1). 

  21. Section 56 read with section 31. 

  22. Section 64. 

  23. Section 57 read with section 32(2). 

  24. Section 58 read with section 34(1). 

  25. Section 59 read with section 35. 

  26. Section 60(1) read with section 40 and section 41. 

  27. Section 60(1)(b). 

  28. Section 60(2). 

  29. Section 65. 

  30. Section 65. 

  31. Section 66. 

  32. See Chapter 5 of the Money Laundering Regulations. 

  33. Section 61 read with Section 42. 

  34. Section 61(b). 

  35. Section 61(c). 

  36. Section 62 read with Section 43(a). 

  37. Section 62 read with Section 43(b). 

  38. Section 62A read with Section 45B. 

  39. Section 62A read with Section 45B. 

  40. Section 62A read with Section 45B. 

  41. Section 62A. 

  42. Section 63. 

  43. Section 62C and Section 62D.