Current FICA regulations make it clear that estate agents HAVE a duty to investigate clients

The widely disseminated news that a leading nationwide SA estate agency group is being investigated by the Estate Agency Affairs Board for possibly contravening FICA (Financial Intelligence Centre Act) rulings should be seen as yet another warning that estate agents are wholly and completely responsible for ensuring the money made available by buyers is not in any way "tainted" or being used to launder funds illicitly gained, says Rowan Alexander, Director of the Cape Town independent Estate Agency Alexander Swart Property. This, he adds, is particularly important where the client is in a position of authority and as in the case mentioned, is listed by the South African government as having political or financial influence, possibly with access to public funds.

Alexander says that while it is relatively easy to identify such people it can be far harder to investigate small time businessmen or low profile clients who apparently have no criminal past and yet may be laundering or handling money from a dubious source. The FICA regulations stipulate that all people involved in property transactions should provide proof of identity and residence and should list all companies or trusts involved in the purchase or sale, as well as the identities and addresses of the directors, trustees and shareholders of these.

Often even perfectly innocent clients are unwilling or unable to do this, no matter how much they are reminded by the agent, possibly because they have inadequate filing systems or have lost the documents required.

"There can be no excuse for an agency where it is clear that insufficient data was submitted, or where the agency did not persevere with their enquiries: The Financial Intelligence Act places the full onus on the agency. It gives them the right to ask for further documentation where they feel information is lacking and, should the agency find that the client is not responding, it is duty bound to report this to the FICA authorities. In addition, the agency is required to keep a full record of its dealings with the client which can also be demanded by FICA at any time."

Some have complained that they resent being accused of breaking the law when they are not in full compliance with the FICA regulations in these matters but, Alexander says FICA have to resort to this because it is impossible for them to investigate every property buyer or seller in South Africa on their own.

"The effectiveness of these regulations is shown by the fact that several agencies have helped unearth illicit money sources and destinations and prevented property being used as a safe haven for hot money - even though this may have resulted in their losing a deal."

For further information, please contact Rowan Alexander on cell phone 082 581 3116 or by email: rowan@aspropery.co.za