SA banks must 'know their clients'
19 May 2004
The Financial Intelligence Centre Act gives South Africa's banks until June 30 to comply with "know your client" provisions aimed at preventing money laundering and maintaining the integrity of the country's financial systems.
The provisions require all financial institutions to verify the personal details of their customers.
While the the onus is on banks to verify this information, banking customers risk having their accounts frozen from 1 July if they do not provide their banks with the necessary proof of identity and residence - and banks are encouraging their clients come forward with this in good time.
Existing and potential account holders should provide their banks with the following documentation:
- Proof of identity (by means of a green bar-coded ID document).
- Proof of residential address (by means of a municipal rates bill, Telkom bill or valid TV licence displaying the account holder's name and residential
address).
- Proof of tax number, if the customer has one (by means of a document issued by the SA Revenue Service).
"Lower-end" banking customers - people with a monthly turnover of less than R5 000 and a balance ceiling not higher than R25 000 - do not need to provide proof of their residential address, although banks must still identify these clients by name and identity number.
With up to 22 million bank accounts in the country, it is not yet known how many people the Act will affect.
Financial Intelligence Centre acting director Murray Mitchell says the Act, passed in 2001, aims to prevent money launderers from using bank accounts to defraud South Africa's economy, so breaking the cycle used by organised criminal groups to benefit from illegitimate profits.
The Act, the result of five years of investigation and development, complements the Prevention of Organised Crime Act of 1998, which details the money laundering offences.
The new legislation
"has brought South Africa into line with top international standards of financial crime fighting", says Kim Jenkins, head of strategic delivery at First National Bank.
Besides the "know your client" obligations, the Act also imposes record-keeping and reporting obligations on South Africa's banks, requiring them to compile reports on any unusual transactions - such as unusually large deposits or withdrawals - and to forward these to the appropriate law enforcement agencies if any transgressions are found.
The Financial Intelligence Centre, established to identify the proceeds of unlawful activities and to combat money laundering, started receiving suspicious and unusual transaction reports from businesses in February 2003.
Its objectives will expand to include combating of terrorist financing offences when the Anti-terrorism Bill is enacted.
The Centre makes its information available to the country's investigating authorities: the SA Police Service; the
National Prosecuting Authority through the Directorate of Special Operations (Scorpions) and the Asset Forfeiture Unit; the intelligence services; and the SA Revenue Service.
The Centre also exchanges information with similar bodies in other countries.
SouthAfrica.info reporter
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