Nobody likes paperwork! And filling in hundreds of forms is just the worst, especially when you have to do it at every store where you have an account or receive credit, including banks, cellular phone companies and even retail outlets. So what is all the fuss about? And what does FICA mean anyway?
The money laundering problem
Money laundering refers to the criminal act of disguising the source of proceeds or funds in such a way that they look legitimate, even when these proceeds or funds were actually obtained illegally. Often thought of as a victimless crime, because the money taken does not have one clear owner from which it is stolen, money laundering is a very real crime with tremendous impact on businesses across the world.
In South Africa, the powers that be developed an action plan to help curb the amount of money laundering happening in the country. That’s where FICA comes in.
Understanding what FICA is
FICA, or the Financial Intelligence Centre Act, is an act that was passed by the SA government in 2001. By adhering to FICA’s policies and procedures, both the public sector and the private sector take preventative steps against money laundering. This is done by assisting with
the identification of unlawful activities.
What FICA means to you
While it may be slightly irritating to have to worry about documentation every time you want to open an account or contact a new insurance provider, adhering to FICA is not simply good for the South African society and economy, it is also a legal requirement. If financial service providers like banks do not gather all the necessary documentation from you, they may receive a hefty fine for not complying with FICA.
All you need to do to comply with FICA requirements is to ensure that your financial services providers have a certified copy of your ID as well as a recent proof of residence (such as a rates and taxes invoice that was posted to you).
Considering that, for now, the only real implications that FICA has for the ordinary citizen is that we have to produce an ID and proof of residence document when applying for new accounts or credit, it really does seem worthwhile, especially when you think that not being FICA-compliant could result in your service being suspended or bank account frozen. After all, everyone wants to nip illegal activity in the bud and promote a crime free, exponentially developing South African economy, right?