A frequently asked question among Accountable Institutions (AIs) is “What documents should I be requesting in order to adequately perform FICA for certain clients or situations”. As the Financial Intelligence Centre Amendment Act (FICA as amended) takes a risk-based approach, the answer is often “it depends”!
Whilst the Act does set out minimum requirements around the identification and verification of clients, there is no prescribed list of documents that should be collected for evidence and verification purposes. Help is at hand as over time there has become a generally accepted list of many FICA documents that Accountable Institutions use to evidence their client’s due diligence.
Proof of Identity
For example, to evidence proof of identity, in South Africa, the only documents recognised for this purpose is a green barcoded ID book or ID card, which could be verified through the physical presentation, certification or validation against a reputable third-party source. However, what if the person lost their ID book?
In this situation, you could look at taking a risk-based approach and perhaps accept an alternative document which could be a passport or a driver’s license as a temporary measure with supporting evidence that the loss has been reported to SAPS and Home Affairs, along with a reminder to request the ID document to identify and verify as soon as the replacement is received. The alternative document must contain the person’s photograph, full names or initials and surname, date of birth and their identity number. A national passport of a foreign national who is neither a citizen nor resident of the Republic of South Africa is an acceptable proof of identification, however the same must be issued by that person’s country of citizenship.
Proof of Address
Similarly, for proof of address, a wide range of documents from governmental or reputable institutions could be accepted, such as a municipality bill, bank statement or perhaps a current lease agreement.
Does the document need to be not older than 3 months?
It has never been written into law that a document needs to not be older than 3 months. However the latest guidance offered by the FIC is to take a risk-based approach and so to ensure a document is valid and most up-to-date it is often recommended that your business implements the 3 months requirement.
Concerning legal or juristic entities, the types of documentation to be collected is informed by the entity type. For identification purposes, you would look to the founding documents or documents of incorporation to verify the identity of the juristic entity. For instance, a copy of the trust deed and the letters of authority from the Master of the High Court will always be requisite for an inter vivos trust, a copy of the Will as well as the letter of executorship for a Testamentary trust. Additionally the related parties (founders, trustees, beneficiaries e.t.c in the case of a Trust/ directors, signatories, authorised persons and ultimate beneficial owners in the case of unlisted companies) of juristic entities must be identified and verified as part of the due diligence process. The due diligence process must be informed by a robust risk rating framework which must address the following, a client - level risk assessment, a business risk assessment as well as a product/service risk assessment. What this means is that, as an AI the risks associated with the client’s profile must be considered, your client’s nationality or country of business registration and/or operation, their source of wealth and source of funding. The industry related AML and TF risks within which the AI operates must also be taken into consideration. Finally the product and/or service risks must be addressed when formulating the risk rating scheme. Upon risk assessing clients an AI would then subject clients that pose a medium and low risk to a standard due diligence and high risk rated clients to an enhanced due diligence.
For evidencing more unique elements such as the source of funds or gaining a level of comfort as part of an enhanced due diligence activity, would depend on the matter on hand and the information you were looking to confirm. For example, for evidencing a loan you may ask to see a copy of a signed loan agreement to check that the parties, amounts and terms align with any declaration a client has made. For an escrow matter, you can ask to see a copy of the underlying transaction contract identifying all related parties, values, terms and conditions.
With DocFox you can seamlessly upload a range of supporting documents, your clients can either use their phone camera to take a photo of the documents or upload files via our user-friendly online portal. The system will then analyse the documents and flag any issues. Key information is also extracted from the documents and compared against third-party data including the Department of home affairs, credit bureaus and the CIPC amongst other sources. Leaving you with the simple task of making a decision whether or not to accept the documents.
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