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Money Laundering and the Financial Intelligence Centre Act
Money laundering is a serious problem worldwide, involving vast sums of money. It can be defined as a process whereby the proceeds of illegal activities are channeled into lawful commercial dealings in an attempt to
- Conceal the source of the money, and
- Create the impression that the money has been obtained legitimately.
An example of this would be where a person buys immovable property using money obtained from drug trafficking or other criminal activity.
In South Africa two Acts have been passed to combat organised crime and money laundering in particular, namely the Prevention of Organised Crime Act 121 if 1998 and the (FICA) Financial Intelligence Centre Act 38 of 2001.
FICA aims to combat money laundering in particular via the Financial Intelligence Centre (FIC) and imposes duties on certain institutions and professions including Estate Agents and Attorneys. Hefty fines and imprisonment can be imposed on accountable institutions that fail to comply with the duties under the Act.
Estate Agents are supervised to comply with the FICA Act by the Estate Agency Affairs Board.
Estate Agent’s Duties under the Financial Intelligence Centre Act
There are four duties imposed on Estate Agents by FICA, namely
- the duty to establish and verify the identity of clients,
- the duty to report suspicious transactions to the FIC,
- the duty to report to FIC
- cash payments over a prescribed limit, and
- electronic transfers of money over a prescribed limit to and from South Africa.
- Internal administrative duties, namely
- the duty to keep records of clients and transactions,
- the duty to formulate and implement internal rules to ensure compliance with the Act,
- the duty to train staff
- the duty to appoint a compliance officer to monitor compliance with the act.
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