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Financial Intelligence Centre Act, 2001 (Act No. 38 of 2001)


Guidance Note 3

Guidance for Banks on Customer Identification and Verification and Related Matters



Money laundering has been criminalised in section 4 of the Prevention of Organised Crime Act, 1998. A money laundering offence may be described as the performing of any act that may result in concealing the nature of the proceeds of crime or of enabling a person to avoid prosecution or in the diminishing of the proceeds of crime.


Apart from criminalising the activities constituting money laundering, South African law also contains a number of control measures aimed at facilitating the detection and investigation of money laundering. These control measures, as contained in the Financial Intelligence Centre Act, 2001 (the "FIC Act"), are based on three basic principles of money laundering detection and investigation, i.e. that:

intermediaries in the financial system must know with whom they are doing business;
the paper trail of transactions through the financial system must be preserved;
possible money laundering transactions must be brought to the attention of the Financial Intelligence Centre and the investigating authorities.


The control measures introduced by the FIC Act include requirements for institutions to establish and verify the identities of their clients, to keep certain records, to report certain information and to implement measures that will assist them in complying with the FIC Act.


The majority of obligations under the FIC Act apply to "accountable institutions". These are institutions that fall within any one of the categories of institutions listed in Schedule 1 to the FIC Act.


The FIC Act also established the Financial Intelligence Centre ("the Centre") as the agency responsible for the collection, analysis and disclosure of information to assist in the detection, prevention and deterrence of money laundering in South Africa. In addition, section 4(c) of the FIC Act empowers the Centre to provide guidance in relation to a number of matters concerning compliance with the obligations of the FIC Act.


Application of this Guidance Note


This Guidance Note applies to the accountable institutions that are referred to in the following items of Schedule 1 to the FIC Act:


Item 6 (a person who carries on "the business of a bank" as defined in the Banks Act, 1990).
Item 7 (a mutual bank as defined in the Mutual Banks Act, 1993).
Item 14 (The Post bank referred to in section 51 of the Postal Services Act, 1998).
Item 16 (The lthala Development Finance Corporation Limited).


This Guidance Note is published by the Centre under section 4(c) of the FIC Act to assist these accountable institutions and the relevant supervisory bodies with the practical application of certain client identification and client verification requirements of the FIC Act. Some of the terminology used in this Guidance Note is explained in the glossary.


Guidance provided by the Centre is the only form of guidance formally recognised in terms of the FIC Act and the Regulations issued under the Act. Guidance emanating from industry associations or other organisations, therefore, in the Centre’s view, does not have a bearing on compliance with the obligations imposed by the FIC Act or interpretation of its provisions.


The guidance provided by the Centre in this Guidance Note, although authoritative, is provided as general information only. The Guidance Note does not provide legal advice and is not intended to replace the FIC Act or the Money Laundering Control Regulations ("the Regulations") issued under the FIC Act in December 2002.