Page 94 - Profile's Unit Trusts & Collective Investments - March 2026

Chapter 5 Legislation and guidelines

accountable institutions to simplify the due diligence measures applied where they assess money
laundering (ML) and terrorist financing (TF) risks to be lower.
Despite the risk-based approach, the Act continues to specify some transaction
thresholds. For example, all deposits of notes or traveller’s cheques exceeding R50 000
(as single or aggregated transactions made in close succession or across associated
accounts) are reportable. Electronic transfers into or out of South Africa of R20 000 or more must
be reported to the FIC.
This includes SWIFT payments, international EFTs and inward or outward foreign transfers.
In some instances accountable institutions must not only report suspicious activity but must
also take action. Under Section 28A of the Act, an accountable institution is obliged, in addition
to reporting to the FIC, to freeze assets if it discovers it holds property (typically financial assets)
associated with an individual or entity on the United Nations Security Council sanctions list.
Section 28A deals with matters of fact – for example, where an accountable institution has an
account belonging to a known terrorist.
Under Section 29 of the Act, which relates to unusual transactions, an accountable institution
is required to report suspicious activity to the FIC but without taking action. Section 29 deals
specifically with situations where an accountable institution has no proof of ML/TF activity but has
reason to believe that something is amiss. One example given in the FIC’s guidance note concerns
a client who seeks to deposit cash at a bank branch but then changes his mind after being asked
the source of the funds by the teller and leaves with the money still in his possession. This would be
reportable under Section 29.
Know your client (KYC) and client due diligence (CDD)
Central to FICA are provisions which place an obligation on FSPs and FSPRs to identify and verify
their clients. If a client is acting on behalf of another person or entity, the Act requires the accountable
institution to establish and verify the identity of the third party, and to verify that the client has the
authority to act on behalf of the third party.
In order to comply with FICA accountable institutions need to apply know your client (KYC) and
client due diligence (CDD) measures which include identifying and verifying a client’s identity
before establishing a business relationship or concluding a transaction above prescribed limits.
This includes confirming personal or registration details, understanding who the beneficial owner
is where juristic persons or trusts are involved, and obtaining sufficient information about the nature
and intended purpose of the business relationship.
Enhanced due diligence and ongoing monitoring of transactions is required for higher-risk clients
– such as politically exposed persons (PEPs), complex ownership structures, or clients operating in
high-risk jurisdictions. Records for KYC and CDD purposes need to be kept up to date.
Under FICA, accountable institutions typically require a written application for service
accompanied by certain supporting documentation. For a South African citizen or resident, typical
requirements include:
R A copy of the investor’s identity document showing the ID number and photograph
(or passport copy for foreign nationals)
R Proof of SA income tax number (ie, correspondence from SARS showing name and
tax number)
R Proof of residential address (such as a bank statement, utility bill or telephone account)
R Guardian contact details in the case of a minor
R Proof of banking details (such as a bank statement less than three months old)
A recent amendment to FICA, has made accountable institutions responsible for determining who
has control and ownership of a company, trust or other legal entity. This means the institution must
determine all natural persons who own or have control over the entity.
Where the client is a company or trust or other legal entity, documentary evidence can become
significant as it may include the above details for all directors and senior managers, proof of a trading
name (where applicable), proof of VAT registration, proof of the physical address where the entity

92 Profile’s Unit Trusts & Collective Investments March 2026