Many thanks to real estate! One of the good ways to hide money from the government is using the proceeds from illegal activities to buy, own and sell valuable goods like properties. Money launderers and terrorist financiers, politically exposed persons in particular, find the property business as a safe haven for hiding and cleaning huge funds and introducing the proceeds from their illegal acts into the financial system. 

 

Given that estate agents, as experts, are familiar with their client's behaviour and can easily identify when a client is shady,  the FIC act in South Africa has come up with some FICA requirements for estate agents.
 

Let's get to the root. Does FICA recognize estate agents as accountable institutions? Do you know the FICA requirements for estate agents and the FICA documents for estate agents like you?  Why are FICA documents necessary when you buy and sell properties? Are there consequences for non-compliance with the FICA rules for estate agents? 
 

This article answers every one of your questions on how the FIC act affects real estate and most importantly how you can become FICA compliant as an estate agent.
 

FICA and Estate Agents: What is the FICA Act for Estate Agents?
 

The FIC act 38 of 2001 for estate agents issued a compliance communication stating that “Accountable institutions may not establish business relationships or conclude transactions with clients unless they have verified the identity of the clients. This applies to estate agencies as well as banks and other financial institutions''.
 

This implies that the identities of each trustee will need to be verified even before a property is listed.

 

Recommended - How to Fix ‘Identity Verification Failed’ SASSA SRD Status

 

Why is FICA important for Estate Agents?

 

The property market is a prime target for criminals because, with it, they can easily 'clean' huge illegal money. Because of this, estate agents in South Africa are required to become FICA compliant. This ensures that both clients and estate companies are assured of legitimate transactions. 

 

The FICA internal rules for estate agents help protect estate companies, trusts, and individual customers from money laundering transactions. FICA requires that estate agents in agreement with its risk management and compliance programme continuously conduct due diligence concerning a business relationship including transaction monitoring throughout the entire business relationship. With the FICA law, an estate company is obligated by law to report, using the FICA document for estate agents, any discrepancies in transactions or documentation as set out by the law.  Also, clients can report agents that are not compliant. 

 

For these reasons, estate agents need to be regulated. The regulatory body, the Estate Agency Affairs Board of South Africa is responsible for ensuring real estate agents comply with the new FICA requirements for estate agents.

 

How to Become FICA compliant- FICA Estate Agents Requirements

 

Becoming FICA compliant as an estate agent requires you fulfilling some of the new FICA requirements for estate agents. Acceptable FICA documents for estate agents should be at most 3 months to the date of the acceptance of the Offer to Purchase. The following are the FICA compliance documents required when selling property: 

 

1. Personal FICA Act Requirements

 

- Proof of Identity & Residence

 

Among FICA identification and verification, of importance is providing ID verification in form of a driver's license or a South Africa ID card verification to prove the name of the client and a utility bill as proof of address verification to confirm the address for all the members of the trustees if the seller is a trust, all in compliance with the money laundering regulations 2017. 

 

- Proof of Funds:

 

The FICA internal rules for estate agents also include bank statements for proof of funds, and evidence of source of funds such as consistent wages from employment, verified against bank statements. You also need to be a registered estate agent in South Africa. 

 

- Proof of income tax number on a SARS document (If applicable)

 

2.  Foreign Nationals FICA Requirements

 

  • Passport for Identity verification.
  • Visa Permit (Temporary or Permanent)
  • Proof of REsidence, not o; older than 3 months
  • Letter from the company (If a foreign national is an employee in South Africa
  • Proof of Income tax number on a SARS document (if applicable).
     

3.   Close Corporations FICA Requirements

 

  • All CIPC- Companies and Intellectual Property Commission documents including CK1  (Founding Statement and Certificate of Incorporation) and CK2 (Amended founding statement, if applicable) documents.
  • Proof of business address.
  • CC trading name document
  • Proof of CC income tax and VAT registration number on SARS
  • Resolution with appended signature

 

4.  FICA Documents for Estate Companies

 

  • All CIPC documents including 
  • COR14.3 / CM46 (Registration Certificate) 
  • COR15.1 / CM1 (Memorandum and Articles of Association)
  • COR21 / CM22 (Notice of change of registered address, if applicable)
  • COR39 / CM29 (Notice of change of company directors, if applicable)
  • Proof of business address n
  • Document showing company trading name, if applicable
  • Proof of Income tax number on a SARS document (if applicable).
  • Resolution with appended signature.

 

5.   FICA Estate Agent Requirement for Estate Trusts

 

  • Letters of Authority
  • Trust Deed
  • Proof of address for the Trust 
  • All FICA for the Founder/Donor and all Beneficiaries as stated in the Trust Deed
  • All FICA for the Trustees as stated in the Letters of Authority, 
  • Proof of Trust Income Tax and VAT registration numbers on a SARS document.
  • Resolution with appended signature. 

 

6.  The FICA document for deceased estates

 

  • Death Certificate
  • Letters of Executorship
  • All FICA for the Executor/s signing the Offer to Purchase.

 

Penalties for FICA Non-Compliant Estate Agent

 

Non-compliance to the FICA act usually results in severe penalties ranging from disciplinary actions to fines, loss of license, bad reputation, legal prosecution, and inspection from EAAB.

 

See Also: Largest Anti-Money Laundering (AML) Fines  of 2021 in Africa
 

Where Can I Report Estate Agents in South Africa?

 

As earlier mentioned, both clients and estate agents are to ensure both parties are FICA-compliant. In cases where an estate agent is not- compliant, the Estate Agency Affairs Board is where to complain about estate agents in South Africa.
 

Chase the Money while we Chase the Documents!

 

FICA compliant for estate agents just got easier! At Youverify, we realize estate agents have a lot more on their table than chasing documents and verifying identities. Besides, doing the FICA verification process the right way requires expertise and that is what we are built for. 
 

See how 100+ leading companies use YV OS for KYC and AML screening of customers for FICA compliance and real-time risk detection. Request a demo today.