The purpose of the Financial Intelligence Centre Act 38 of 2001 (“FIC Act”) is to impose certain duties on accountable institutions and other persons or entities that may be used for money laundering purposes and/or the financing of terrorist and related activities; to provide for customer due diligence measures; and to provide for a risk based approach to client identification and verification.
Accountable institutions are listed in Schedule 1 of the FIC Act and include inter alia legal practitioners; estate agents; banking institutions; financial service providers; gambling institutions; persons who carry on the business of dealing in foreign exchange or the business of lending money against security of securities; a board of executors or a trust company or any other person that invests, keeps in safe custody, controls or administers trust property within the meaning of the Trust Property Control Act 57 of 1988.
Section 21 of the FIC Act imposes a duty on accountable institutions to establish and verify the identity of a prospective client when engaging with them to enter into a single transaction or to establish a business relationship.
In terms of Section 21 of the FIC Act, if a client is acting on behalf of another person, the accountable institution needs to establish and verify the identity of that other person and the client’s authority to establish the business relationship or conclude the single transaction on behalf of that other person. The following documents may be accepted to confirm such authority:
- power of attorney;
- resolution duly executed by authorised signatories; or
- court order authorizing the third party to conduct business on behalf of another person.
An accountable institution must obtain information to reasonably enable the accountable institution to determine whether future transactions that will be performed in the course of the business relationship concerned are consistent with the institution’s knowledge of that prospective client, including information describing –
(a) the nature of the business relationship concerned;
(b) the intended purpose of the business relationship concerned; and
(c) the source of the funds which that prospective client expects to use in concluding transactions in the course of the business relationship concerned.
Section 21B of the Fic Act compels accountable institutions to perform certain due diligence requirements relating to clients who are legal persons, trusts or partnerships. The FIC Regulations, 2002 provide some detail on the identification and verification of various classes an accountable institution is most likely to deal with. In this article, we focus on the information and/or documentation required for natural persons, South African companies, close corporations and trusts.
South African citizens and Residents
- A certified copy of his/her identity document issued by the Department of Home Affairs or alternatively and under exceptional circumstances, A South African driver’s license or passport; and
- Proof of residential address reflecting the individual’s name and residential address which includes but is not limited to a utility bill; a bank statement; a lease or rental agreement; municipal rates and taxes invoice; telephone or cellular account; or a statement of account issued by a retail store. If none of these are available, a person living with the client or an employer of the client must depose of an affidavit stating the name, residential address, identity number of the client and the deponent of the affidavit; the relationship between the client and the deponent and confirmation of the client’s residential address.
- His/her foreign passport and further confirmation if required by the accountable institution such as a letter of confirmation from a person in authority (i.e. from the relevant embassy) which confirms the authenticity of the individual’s passport; and
- Proof of his/her residential address.
South African Company and Close Corporations
In the case of a company, a certificate of incorporation (CM1 or COR 14.3); and notice of registered office and postal address (CM22 or COR 21); or
In the case of a close corporation, the most recent versions of the Founding Statement and Certificate of Incorporation (CK1), and Amended Founding Statement (CK2) if applicable;
- Proof of income tax and value added tax registration issued by the South African Revenue Service;
- Certified copies of each director and each member’s identity documents;
- Proof of each director and member’s residential addresses.
- A certified copy of the trust deed;
- A certified copy of the letters of authority;
- Proof of value added tax registration number, if applicable;
- Certified copies of the identity documents of each trustee and beneficiary of the trust; and
- Proof of each trustee and beneficiary’s residential addresses.
- A certified copy of any document is a copy of the original document that is confirmed by a stamp or in writing by a Commissioner of Oaths to be a true copy of the original document. The certification date must not be older than 3 months.