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South Africa has recently introduced new regulations aimed at combating money laundering and terrorist financing. These regulations were implemented in response to the country being placed on the Financial Action Task Force’s (FATF) grey list on 24 February 2023.  Being placed on the grey list means that South Africa has been deemed to have strategic deficiencies in its anti-money laundering and counter-terrorist financing framework.

To address these deficiencies and improve the country’s compliance with international standards, the South African government has introduced more stringent Know Your Customer (KYC) requirements. As a result, financial institutions and tax and accounting firms are required to collect and verify certain information about their clients, including FICA documents.  Failure to comply with these new regulations can have serious implications for both individuals and businesses.

“To address these deficiencies and improve our country’s compliance with international standards, it is important that we all work together to ensure that the necessary documentation is collected and verified,” says Danielle Luwes, Tax Manager at Hobbs Sinclair Inc..

FICA documents are required from both natural persons and juristic persons as outlined below:

If the client is a natural person, an eligible copy of their ID or passport, as well as  proof of address not older than 3 months are required.

 If the client is a juristic person:

  1. Copy of the company CIPC registration document (CoR 14.3) not older than 2 years;
  2. Completed Ultimate Beneficial Ownership Declaration;
  3. Copy of ID for Directors;
  4. Proof of address for Directors (not older than 3 months);
  5. Copy of ID for Shareholders holding more than 25% of shares in the Company; and
  6. Proof of address for Shareholders holding more than 25% of shares in the Company.

“It is important for individuals and businesses to take these new regulations seriously and ensure that the necessary documentation is remitted in a timely manner to avoid any negative consequences,” advises Luwes. For individuals, non-compliance could result in fines or even criminal charges and the guilty party may also face difficulty in accessing certain financial services or engaging in transactions that require FICA documentation.

For businesses, failure to comply with the regulations could result in reputational damage, loss of business, and financial penalties. Businesses may also face difficulty in obtaining certain licences and approvals, as well as restrictions on their ability to engage in certain transactions or activities.

If you are concerned about confidentiality, you can be assured that the collection and processing of documentation is done in accordance with the relevant data protection laws and regulations so all personal information is kept confidential and used only for the purposes of complying with regulatory requirements.

“Understandably this may be an inconvenience,” says Luwes, “but by doing your part to comply with the new regulatory requirements will go a long way to combatting money laundering and terrorist financing in South Africa.”

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