FICA – Your protection against fraud

With the threat of fraud ever present in large financial transactions, FICA is being effectively implemented by accountable institutions to remove the risk for all concerned…

Buying Property On Auction | Property Blog Articles

Many people are now familiar with the FICA (Financial Intelligence Centre Act) requirements, and have been through the process of supplying the necessary documentation in order to be FICA compliant in a particular situation. However, what is often not understood is why this process needs to be repeated multiple times and what the underlying purpose is.

The context

In order to appreciate the benefits of FICA, one must see it in the context of the financial fraud that has been rife, both in South Africa and internationally.

In an attempt to curb this, the Financial Intelligence Centre Act was brought into operation in 2003. The purpose of this legislation is to combat financial crimes, including money laundering and tax evasion, as well as financing of terrorist activities, through comprehensive verification of individuals who are party to a transaction.

The process

Although it may feel repetitive for a consumer, FICA requires all “accountable institutions”, including attorneys, banks and estate agents, to obtain their own unique FICA documentation from an individual or legal entity. This means that for each property transaction, the necessary verification documents must be produced for each of the “accountable institutions” involved, ensuring a more stringent process of authentication and reducing the risk of fraudulent transactions and money laundering.

To comply with FICA, proof of identification and proof of residential address need to be produced. Without these documents, a transaction cannot proceed.

FICA and the property transfer

When it comes to the property transfer, the risk of fraud lies in false information being supplied to the accountable institution, or such an institution not obtaining the required information at all. The banks are, for example, exposed when proper FICA compliance does not take place and false documentation is used to open accounts. This can lead to fraudulent payments and money disappearing as a result. Buyers and sellers should take extreme precaution when making electronic payments. Payments must never be made on email instructions without additional verification.

To avoid any issues, buyers and sellers should take care to obtain and provide all the documentation and information that is requested by the attorneys. With this on hand, the risk of fraud can be largely prevented and property transfers can be concluded successfully.

Follow Snymans on Facebook for more legal advice, information and news about property.

Recommended for you

My name has changed - what happens to my property’s title deed?
Legislative Guidelines

The concept of control in the juristic world[post_view before=""]

Disputes or issues around decision making in a company very often involve the question of control – and it’s likely that the decision maker is the one who controls the company.

Read More
Property Blog Articles | Advice | Contractual Matters | Market News
Legislative Guidelines

The importance of a signed OTP[post_view before=""]

The Alienation of Land Act (ALA) clearly states that the validity of an Offer to Purchase (OTP) depends on the contract for the sale of immovable property being in writing and signed by the concerned parties or their authorised representatives acting on their written instruction. And the importance of signatures on an agreement of sale has once again been highlighted by a recent decision handed down by the Gauteng Local Division of the High Court in Johannesburg.

Read More
Minors and immovable property
Legislative Guidelines

Court ruling: What if Occupation is Granted in an Agreement of Sale and the Seller Enters into a Second Agreement?[post_view before=""]

In the matter of Fulsome Properties (Pty) Ltd v Selepe and Others held recently at the High Court of South Africa, Gauteng Division, Pretoria, Fulsome Properties (Pty) Ltd (the applicant) requested an urgent interdict to restrain the first and second respondents (Fiona Gontse Selepe and Lentse Investments) from communicating and interfering in any manner whatsoever with the applicant’s tenant(s) residing at the property in question.

Read More
Property Blog Articles | Advice | Contractual Matters | Market News
Legislative Guidelines

Court ruling: The Subdivision of Agricultural Land[post_view before=""]

In a recent decision of the Appellate Division in Bloemfontein, in the matter of Maxrae Estates (Pty) Ltd v Minister of Agriculture, Forestry and Fisheries and Another (407/2020) [2021] ZASCA 73 (9 June 2021), the court made it clear that the executive must apply its mind prior to making decisions or exercising its legislative discretion.

Read More
Property Blog Articles | Advice | Contractual Matters | Market News
Legislative Guidelines

SPLUMA certificates required for property transfers in Mpumalanga[post_view before=""]

SPLUMA stands for the Spatial Planning and Land Use Management Act, and SPLUMA certificates are governed by the act together with the by-laws of each local municipality.

Read More

Need more Snymans content?

Sign up for our monthly newsletter.

FICA – Your protection against fraud

With the threat of fraud ever present in large financial transactions, FICA is being effectively implemented by accountable institutions to remove the risk for all concerned…

Buying Property On Auction | Property Blog Articles

Many people are now familiar with the FICA (Financial Intelligence Centre Act) requirements, and have been through the process of supplying the necessary documentation in order to be FICA compliant in a particular situation. However, what is often not understood is why this process needs to be repeated multiple times and what the underlying purpose is.

The context

In order to appreciate the benefits of FICA, one must see it in the context of the financial fraud that has been rife, both in South Africa and internationally.

In an attempt to curb this, the Financial Intelligence Centre Act was brought into operation in 2003. The purpose of this legislation is to combat financial crimes, including money laundering and tax evasion, as well as financing of terrorist activities, through comprehensive verification of individuals who are party to a transaction.

The process

Although it may feel repetitive for a consumer, FICA requires all “accountable institutions”, including attorneys, banks and estate agents, to obtain their own unique FICA documentation from an individual or legal entity. This means that for each property transaction, the necessary verification documents must be produced for each of the “accountable institutions” involved, ensuring a more stringent process of authentication and reducing the risk of fraudulent transactions and money laundering.

To comply with FICA, proof of identification and proof of residential address need to be produced. Without these documents, a transaction cannot proceed.

FICA and the property transfer

When it comes to the property transfer, the risk of fraud lies in false information being supplied to the accountable institution, or such an institution not obtaining the required information at all. The banks are, for example, exposed when proper FICA compliance does not take place and false documentation is used to open accounts. This can lead to fraudulent payments and money disappearing as a result. Buyers and sellers should take extreme precaution when making electronic payments. Payments must never be made on email instructions without additional verification.

To avoid any issues, buyers and sellers should take care to obtain and provide all the documentation and information that is requested by the attorneys. With this on hand, the risk of fraud can be largely prevented and property transfers can be concluded successfully.

Follow Snymans on Facebook for more legal advice, information and news about property.