FAQ
  • Q22. Does the address slip found in ID books issued by the Department of Home Affairs provide adequate proof of verification of residential address?

    Regulation 4 (3) of the Money Laundering Control Regulations, requires that an institution use "information which can reasonably be expected to achieve" verification of an address. In the view of the Centre the address slips issued by Home Affairs does not constitute information which can reasonably be expected to achieve verification of a person's current address, as it is not an independent source document and may be outdated and therefore not reflect current information.

  • Q23. In terms of the identification process will a photocopy or faxed copy of a document suffice?

    Regulation 4 of the Money Laundering Control Regulations concerning the verification of a person’s identity is based on a view that the client is met face-to-face when his or her particulars are obtained. This implies that the original identity document and originals or certified copies of other documents will be sighted as part of the verification process. Copies of these documents can then be made for record keeping purposes.

    Regulation 18 of the Money Laundering and Terrorist Financing Control Regulations provides for instances where client information is obtained in a non face-to-face situation. In such cases institutions “must take reasonable steps” to confirm the existence of the client and verify the identities of the natural persons involved. This implies that documents which are certified as true copies of originals may be accepted, but an institution would have to take additional steps to confirm that documents are in fact those of the client in question. Decisions concerning the additional steps to be taken in cases of a non face-to-face situation should be based on an accountable institution’s risk framework.

  • Q24. What are politically Exposed Persons (PEPs)?

    A politically exposed person or PEP is the term used for an individual who is or has in the past been entrusted with prominent public functions in a particular country. The principles issued by the Wolfsberg Group of leading international financial institutions give an indication of best banking practice guidance on these issues. These principles are applicable to both domestic and international PEPs.

    The following examples serve as aids in defining PEPs:

    • Heads of State, Heads of Government and cabinet ministers;
    • Influential functionaries in nationalised industries and government administration;
    • senior judges;
    • senior political party functionaries;
    • senior and/or influential officials, functionaries and military leaders and people with similar functions in international or supranational organisations;
    • members of ruling or royal families;
    • Senior and/or influential representatives of religious organisations (if these functions are connected to political, judicial, military or administrative responsibilities).
    • Families of PEPs should also be given special attention by accountable institutions. The term "families" includes close family members such as spouses, children, parents and siblings and may also include other blood relatives and relatives by marriage;
    • Closely associated persons. The category of "closely associated persons" includes close business colleagues and personal advisers/consultants to the PEP as well as persons, who obviously benefit significantly from being close to such a person.
  • Q25. Treatment of PEPs in relation to other high risk clients.

    In terms of the FATF standards, specific action should be taken in relation to PEPs as a category of high-risk client. In addition to performing customer due diligence measures, accountable institutions should put in place appropriate risk management systems to determine whether a customer, a potential customer or the beneficial owner is PEP. In addition, accountable institutions should:

    • Obtain senior management approval for establishing business relationships with PEP. When the client has been accepted, the accountable institution should be required to obtain senior management approval to continue the business relationship;
    • Take reasonable measures to establish the source of wealth and the source of funds of customers and the beneficial owners identified as PEPs;
    • Conduct enhanced ongoing monitoring of a relationship with PEP.
  • Q26. What policies should be in place when dealing with PEP?

    It is crucial that accountable institutions address the issue of PEPs in their risk framework, referred to in paragraph 2, and group money laundering control policy. PEPs should be regarded as high-risk clients and, as a result, enhanced due diligence should be performed on this category of client. Heightened scrutiny has to be applied whenever PEPs or families of PEPs or closely associated persons of the PEP are the contracting parties or the beneficial owners of the assets concerned, or have power of disposal over assets by virtue of a power of attorney or signature authorisation.

    The Wolfsberg principles provide additional guidance on how to recognise and deal with a PEP. In addition to the standardised identification and verification procedures, the following prompts are appropriate to recognise PEP:

    • The question whether clients or other persons involved in the business relationship perform a political function should form part of the standardised account opening process, especially in cases of clients from corruption prone countries;
    • Client advisers should deal exclusively with clients from a specific country/region to improve their knowledge and understanding of the political situation in that country/region;
    • The issue of PEPs should form part of a banks regular KYC training programs;
    • Banks may use databases listing names of PEPs including their families, closely associated persons and advisors.
  • Q27. Who should report suspicious and unusual transactions?

    The FIC Act requires a person who carries on a business, or is in charge of or manages a business, or who is employed by a business, and who has a suspicion of money laundering or terror financing activity or unusual transaction, to report this to the Centre.

  • Q28. The benefits of reporting suspicious transaction reports

    Each and every business must be involved in the fight against crime by filing suspicious and unusual transactions to the Centre. Your reports will assist the Centre in the fight against money laundering and the financing of terrorism. By reporting suspicious and unusual transactions, businesses will minimise the risk of the proceeds of crime in the country’s financial system. This can lead to a safer business operating environment. Crime and money laundering risk can be minimised when businesses take necessary measures to recognise suspicious and unusual transactions

  • Q29. What constitute a suspicion?

    A suspicious transaction will often be one when the transaction raises questions or gives rise to discomfort, apprehension or mistrust. When considering whether there is reason to be suspicious of a particular situation one should assess all the known circumstances relating to that situation. This includes the normal business practices and systems within the industry where the situation arises.

    A suspicious situation may involve several factors that may on their own seem insignificant, but, taken together, may raise suspicion concerning that situation. The context, in which a situation arises, therefore, is a significant factor in assessing suspicion. This will vary from business to business and from one customer to another.

    The Centre has issued a Guidance note on suspicious and unusual transactions reporting which was published on Government Gazette no 30873 on the 14 March 2008 and can also be found on the Centre’s official website.

  • Q30. When does one need to report a suspicious transaction?

    Section 29 of the FIC Act imposes obligation on any person who carries on a business or is in charge of or manages a business or who is employed by a business to report suspicious or unusual transactions to the Centre. It provides that required reporters must report if suspect that:

    • the business in which they are involved has received or is about to receive the proceeds of any unlawful activity or,
    • a transaction or series of transactions in which your business is involved has facilitated or is likely to facilitate the transfer of proceeds of unlawful activities from one person to another or from one location to another or,
    • a transaction or series of transactions in which your business is involved has no apparent business or lawful purpose or,
    • a transaction or series of transactions in which your business is involved is conducted to avoid giving rise to a reporting duty under FIC Act or,
    • a transaction or series of transactions in which your business is involved may be of interest to the South African Revenue Service in a possible investigation of tax evasion, or
    • the business in which you are involved has been used or is about to be used in any way to hide or disguise the proceeds of unlawful activities
  • Q31. How does one report a suspicious transaction to the Centre?

    Regulation 22 of the Money Laundering Control Regulations made under the FIC Act stipulates the manner in which a report should be made to the Centre. In terms of the Regulation a report must be made by means of the internet-based reporting available on the Centre’s website at www.fic.gov.za. In exceptional cases where a person does not have the technical capability to make a report electronically that person may send it by facsimile to the Centre on (012) 641 6438 or Post to Private Bag x 177, Centurion 0046.

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