Client identification and money laundering control : perspectives on the Financial Intelligence Centre Act 38 of 2001

de Koker, Louis 2005, Client identification and money laundering control : perspectives on the Financial Intelligence Centre Act 38 of 2001, Tydskrif vir die Suid-Afrikaanse Reg: Journal of South African law, vol. 4, pp. 715-745.

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Title Client identification and money laundering control : perspectives on the Financial Intelligence Centre Act 38 of 2001
Author(s) de Koker, Louis
Journal name Tydskrif vir die Suid-Afrikaanse Reg: Journal of South African law
Volume number 4
Start page 715
End page 745
Publisher Juta en Kie Beperk
Place of publication Kaapstad, South Africa
Publication date 2005
ISSN 0257-7747
1996-2207
Summary The Financial Intelligence Centre Act 38 of 2001 (FICA) compels certain persons and institutions (defined as "accountable institutions'') to identify and verify the identity of a new client before any transaction may be concluded or any business relationship is established.1 Accountable institutions are listed in schedule 1 to FICA and include banks, brokers, financial advisers, insurance companies, attorneys and estate agents. This duty to identify new clients came into effect on 30 June 2003. However, FICA also requires a similar procedure to be followed in respect of all current clients. Current clients are those with whom an accountable institution had business relationships on 30 June 2003.2 After 30 June 2004 an institution may not conclude a transaction in the course of its business relationship with an unidentified current client, until it has established and verified that client's identity as prescribed. An institution that concludes any transaction in contravention of this prohibition, commits an offence and is liable to a fine not exceeding R10 million or to imprisonment of up to 15 years.3

The majority of accountable institutions and their clients failed to meet the June 2004 current client identification deadline.4 This failure posed serious economic and legal risks. With a few days to spare, the minister of finance granted a partial and temporary exemption in respect of these requirements. This article explores the statutory scheme for identification and re-identification of clients and some of the practical problems that were encountered. The June 2004 exemptions from these requirements are also considered and proposals for law reform are made.

The discussion of the FICA identification scheme necessitates the following brief overview of the international and South African money laundering control framework.

1 s 21(1) of FICA.
2 s 21(2) of FICA. See also s 82(2)(b).
3 s 46(2) of FICA read with s 68(1) of FICA.

Language eng
Field of Research 180119 Law and Society
Socio Economic Objective 940499 Justice and the Law not elsewhere classified
HERDC Research category C1.1 Refereed article in a scholarly journal
Persistent URL http://hdl.handle.net/10536/DRO/DU:30016760

Document type: Journal Article
Collection: School of Law
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