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Client banking relationship

26 April 2007

FICA is getting out of hand. FICA was introduced to combat money laundering, imposing a primary duty on accountable institutions to identify the persons with whom they are dealing.

Recently, the day before Easter, a client of mine - to his surprise - ascertained that he could not do internet banking on his Standard Bank account. The Helpline confirmed that the account had been frozen by the bank but could not give the reasons for that, and directed him to the branch where the account is held. The branch in turn did not know either and advised that it must be the central FICA department in Johannesburg that was accountable for the state of affairs. After much communication and deliberation, it transpired that Standard Bank recently scrutinised the FICA documents they have on record and formed the conclusion that, though the client was compliant, the copies of the identity documents provided were too dark. The bank did not have the courtesy to contact the client to request better copies but rather elected to violate the banking client relationship by suspending services. It must be said that, following delivery of improved copies, the bank manager in question did offer his apology for the manner in which the matter had beenhandled. This is welcomed but does not address the uncalled and unsubstantiated inconvenience caused over the Easter weekend.

Is this acceptable conduct and what FICA intended? It must be stressed that the client did comply with the initial requests to provide FICA documents when the legislation was first implemented, had had no subsequent communication and was not in default or non-cooperation at the time the sanction was imposed by Standard Bank, necessitating the conclusion that Standard Bank unilaterally violated the Banking/Client relationship.

Following alleged recent audits some banks have now stepped up a gear with regards to their FICA requirements in registering bonds. Examples are the following:

1. Copies of identity documents are rejected if the bank's recipient is unable to see the photo clearly. Producing such copy is problematic especially given that, with some banks, a copy of the identity document must be faxed (i.e., a copy of a copy), resulting in poor quality.

2. Copies of un-barcoded identity documents, passports and drivers licenses are not being regarded as sufficient.

3. The SAPD is no longer regarded as an appropriate Commissioner of Oaths.

4. Regarding people who do not receive mail delivery at their residential addresses but instead use post boxes or stay on farms or smallholdings and who therefore experience difficulty in complying, it has been suggested that the attorney or person who performs the FICA verification must certify that they stay at the alleged address, which in turn will only be possible if such attorney or person travels to the residence of the subject of the FICA.

These are just some of the problems experienced by attorneys in relation to bonds, and while it is true that each bank has its own requirements and interpretation and, in addition, solution to the problems their interpretation has created, hasn't this gone too far?

The primary duty of the accountable institution is to "establish and verify the identity of the client" and in this regard the attorney acting on behalf of the bank must identify the person, compare his physical features with his identity document (don't even know whether this is required), ascertain that he is who he says he is and stays where he says he stays. What is the purpose if the bank, following this procedure, repeats same by performing an audit on the quality of the paper and questionsthe integrity of the person who represented them in fulfilling the FICA requirements?

Are we on track with regards to what FICA intended, or are we missing the intention completely?

Stian Dreyer
Attorney, Notary, Conveyancer
Brits Dreyer Inc
Tel 021 946 1127

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