The Financial Intelligence Centre Act 38 of 2001 (FIC Act) aims to make this process far more difficult for criminals and to provide measures that law enforcement can use in the fight against the far reaching effects of money laundering, like organised crime and terrorist activities.
The Act confirms that any person who is in possession of or uses or acquires funds or property from illegal activities shall be guilty of an offense if they knew or should have reasonably known that the funds are linked to illegal activities.
Furthermore, several ‘accountable institutions’ – these include but are not limited to banks, investment brokers, estate agents, attorneys and long-term insurance brokers – have been identified and are obliged to comply with the FIC Act to ensure that the necessary legislative and compliance standards are met. To this end, individuals transacting with one of these institutions will be required to supply information, in the form of identification documents, declarations toward the source of the income and the type of activities to be expected etc. to verify their identity.
It is also expressly stated in the FIC Act that no accountable institution may establish a business relationship with an anonymous client or a client with an apparent false or fictitious name. If the client is a juristic entity, for example a Trust that is entering into the transaction, additional documents may be requested e.g. resolutions indicating which Trustees may act and documents establishing who the ultimate beneficial owner/s are.
In spite of these measures, significant due diligence is required by individuals and accountable institutions to ensure that illegal proceeds are not integrated into any sectors of the economy.
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