Important Notice - FICA Compliance in Property Transactions
Category News
Changes to how Property Practitioners can engage with prospective sellers and purchasers have made listing a property for sale or making an offer to purchase a property more stringent than before. While most clients are used to providing all necessary documentation at the latter end of the sales process, new legislation means these documents will now be requested upfront at the mandate stage from sellers and at offer to purchase stage for purchasers.
Hamilton's understands our clients are concerned about being asked for these details upfront and would like to offer a detailed explanation of new FICA requirements, which should assuage any further concerns.
Why do we need to ask for these documents upfront?
In recent months, South Africa has made significant amendments within the Anti-Money Laundering and Combating Terrorism Financing (AML/CFT) realm, demonstrating the nation's ongoing commitment to combat our "greylisted" status.
The FATF (Financial Action Task Force) greylist is a compilation of countries or jurisdictions the Financial Action Task Force (FATF) identifies as "jurisdictions under increased monitoring." These are nations that are collaboratively engaged with the FATF to address strategic deficiencies within their regulatory frameworks, specifically in combating money laundering, terrorist financing, and proliferation financing.
However, It is crucial to acknowledge the significance of complying with the FICA, not only in various personal and financial interactions but also in property transactions. As such, the amended FICA legislation imposes stringent requirements on Property Practitioners.
Documents we are required to obtain
While the average homeowner will only be required to submit ID and Proof of Address, the stringent nature of this new process may entail additional documentation depending on the situation.
More complex ownership schemes will require documentation over and above. These documents may include, but are not limited to, marriage certificates, documents related to trusts and potential Letters of Authority. Be sure to ask our property practitioners for more information in this regard.
How will this affect buyers and sellers?
In short, FICA requirements for client verification apply to all parties involved in property transactions, including sellers, buyers, landlords, and tenants. Clients will be requested to provide proof of identity and address, along with additional information regarding source of funds, and other documents, when required, such as tax number confirmation from SARS and marriage certificates, if applicable.
Compliance with FICA not only fulfils legal obligations for Property Practitioners but also safeguards them and the business. Moreover, it protects the local economy from being blacklisted by international financial systems and hinders criminals and terrorists from exploiting formal financial systems, thereby minimising risks to the greater national community.
Key Amendments and Legal Changes.
The purpose of these amendments is to address deficiencies identified by the FATF (Financial Action Task Force) in its evaluation of South Africa's AML/CFT landscape. Accountable Institutions (AIs), Property Practitioners included, must ensure compliance with these amendments promptly, as the Financial Intelligence Centre (FIC) is expected to intensify inspections in mid-2023.
Please take note of the following resources:
- FIC - https://www.fic.gov.za/Pages/Home.aspx
- FICA - https://www.fic.gov.za/Resources/Pages/FICA.aspx
- Greylisting - https://rb.gy/xw1yy
- Anti-Money Laundering (AML) - https://rb.gy/h362r
- Counter Financial Terrorism (CFT) - https://rb.gy/8nng3
Consolidation of previous Acts
The Act consolidates and amends several pieces of legislation, including FICA, the Trust Property Control Act (TPCA), the Nonprofit Organisations Act (NOA), the Companies Act (CA), and the Financial Sector Regulation Act (FSRA). A common focus of these amendments is the emphasis on Beneficial Ownership (BO) and control structures, underscoring the importance of identifying and verifying individuals with significant control over companies and trusts to mitigate ML/TF risks.
Our goal at Hamilton's is to ensure this change in regulation is stringently upheld whilst making the process as simple and secure as possible for all our clients . As such, we urge all stakeholders in property transactions to prioritise FICA compliance to uphold legal requirements, protect their interests, and contribute to a safer and more secure financial and real estate environment.
Contact one of our offices below if you're unsure about the amended FICA requirements. Our Property Practitioners are eager to assist you with any queries you may have.
Gauteng: 011 463 0155
Cape Town: 021 418 0328
Garden Route: 044 050 3295
Eastern Cape: 076 927 7787
Winelands: 021 863 0551
Mauritius: +230 5723 0369
Email: reception@hamiltons.co.za
Read our previous article here
Hamilton's Property Portfolio holds a Fidelity Fund Certificate issued by the Property Practitioners Regulatory Authority.
Author: Bryce Anderson