Financial Planners, Financial Planning

What is FICA all about?

by Karien Dutton

FICA stands for the Financial Intelligence Centre Act, which is a piece of legislation introduced in South Africa in 2001. The purpose of FICA is to combat money laundering and the financing of terrorist activities by requiring certain financial institutions and other accountable institutions to implement measures to identify and verify the identity of their clients.

FICA applies to a wide range of accountable institutions, including banks, insurance companies, estate agents, and attorneys, and requires these institutions to implement procedures to identify and verify the identity of their clients, monitor their clients’ financial activities, and report suspicious transactions to the Financial Intelligence Centre (FIC).

The main requirements of FICA include:

  1. Customer due diligence: Accountable institutions must identify and verify the identity of their clients before establishing a business relationship with them. This includes obtaining proof of identity and address, as well as information on the client’s financial activities and sources of income.
  2. Record-keeping: Accountable institutions must maintain records of their clients’ information and financial activities, and must keep these records for a minimum of five years.
  3. Reporting: Accountable institutions must report any suspicious transactions to the FIC, and must also report any transactions that exceed a certain threshold amount.
  4. Compliance programs: Accountable institutions must implement compliance programs to ensure that they comply with the requirements of FICA, and must also provide training to their staff on anti-money laundering and counter-terrorist financing measures.

FICA is an important piece of legislation in South Africa, as it helps to prevent the use of the financial system for illegal activities such as money laundering and terrorist financing. By requiring accountable institutions to implement measures to identify and verify the identity of their clients, FICA helps to promote transparency and accountability in the financial sector.