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Protect yourself from illicit deals   Article Date :25 Jul 2006 Comments from Murray Michell, the director of the Financial Intelligence Centre. Guard yourself from becoming an unwitting participant in organised crime when you buy or sell property by ensuring your estate agent is registered with the Estate Agency Affairs Board and by asking for proof that your agent is well versed in the requirements of the Financial Intelligence Centre Act (Fica). Your estate agent must also be able to confirm to you that his or her agency has rules to ensure that it complies with Fica. The Act is designed to prevent organised crime, terrorism and money laundering. You may not be breaking any laws by not insisting on this information, but if your estate agent has not met the requirements of Fica and you unwittingly become involved in a shady deal, you could well face severe financial consequences if the deal is subsequently cancelled. The Financial Intelligence Centre is conducting an awareness campaign aimed at estate agents and casinos, which local and international experience has shown are vulnerable to money launderers. Murray Michell, the director of the Financial Intelligence Centre, says estate agents must understand their obligations and responsibilities in terms of Fica. The level of reporting of suspicious and unusual transactions by estate agents and casinos is poor compared with other institutions that are subject to Fica he adds. To ensure that estate agencies meet the requirements of Fica, they must formulate internal rules, train staff and appoint a compliance officer, who is responsible for implementing the rules and reporting to the Financial Intelligence Centre. According to Michell the centre is assessing the adequacy of estate agencies' internal rules. He says this assessment will include ensuring that no estate agent or institution out to make a quick profit will be able to use a loophole to shield itself when it has not reported suspicious or unusual transactions to the centre. He also says in terms of Fica, every estate agent is regarded as an "accountable institution". Whenever an estate agent establishes a business relationship or concludes a transaction with a client, Michell says the estate agent must; establish and verify the identity of the client in accordance with the provisions of Fica, report any suspicious transactions to the centre, maintain records of all transactions and constantly be on the lookout for suspicious or unusual behaviour and report such behaviour to the centre. He also states that various factors may give rise to a suspicion that Fica is being contravened. He says to determine whether the suspicion is reasonable will depend on the particular context and the profile of the client involved in that transaction. "Estate agents are in a better position to determine what is suspicious or not in their business. There are a host of factors which may cause suspicion of laundering activity." You and your agent should become suspicious if someone offers to purchase a property for an amount that is in excess of the prevailing market price, provides vague or contradictory information or reference, has no record of past or present employment or involvement in a business but who nevertheless engages in large transactions he adds. Other warning signs include someone who engages in a transaction that is payable in a foreign currency or indicates that he or she would like the transaction settled in a foreign currency, who is reluctant to give information about his or her business or source of funds and who refuses to comply with Fica's "know-your-client" requirements. Michell says estate agents should be aware that Fica imposes very strict penalties for failing to comply with the provisions of the Act. These penalties include imprisonment of 15 years or a fine of R10 million for offences such as failing to identify persons, keep records, report suspicious or unusual transactions, and/or comply with directions of the centre. Both an individual estate agent and the employing agency can be held liable. Meanwhile, Jabu Moleketi, the deputy minister of finance, told Parliament recently that some institutions are making the requirements of Fica too onerous and expensive by conducting a Fica-compliant check on every transaction. Moleketi says that once an institution has established a client's identity in terms of Fica, the law does not require the process to be repeated for every subsequent transaction. - Bruce Cameron Article courtesy of Personal Finance. CLICK HERE TO RETURN TO THE MAIN NEWS PAGE