During the administration of property transactions, our clients often \u2013 understandably \u2013 express frustration over the legal requirement to provide both estate agents and conveyancers with their FICA documentation, including ID copies and recent proof of physical address. In transactions involving the use of a mortgage originator and the registration of a bond, purchasers are further required to furnish the parties handling these processes with their FICA documents.<\/p>\n
As frustrating as this process may be, estate agents and attorneys, who are designated \u2018accountable institutions\u2019 under the Financial Intelligence Centre Act (\u2018the FICA\u2019), are statutorily required to establish and verify clients\u2019 identities and related information. In accordance with this designation, accountable institutions are thus obliged to develop and implement their own strategies for assessing and managing the potential money laundering, terrorist financing, and proliferation financing risks posed by the parties to a property transaction. Indeed, prevailing evidence indicates that property transactions, which involve the exchange of large sums of money, provide an ideal platform for financial crimes.<\/p>\n
In essence, each institution is required to identify the client, including the natural person controlling an entity, where applicable, and source of funds. With this information, conveyancers and agents are mandated to cross-check clients\u2019 information against an international list of known terrorists compiled by the United Nations Security Council, assess risk, and report any suspicious transactions to the Financial Intelligence Centre (\u2018the FIC\u2019), among other requirements.<\/p>\n
While accountable institutions\u2019 processes for addressing risk are mostly similar, the FICA requires each qualifying accountable institution to develop its own unique risk strategy to mitigate pitfalls and achieve and maintain compliance. Consequently, this precludes conveyancers, estate agents, and financial institutions from substituting their compliance obligations with another\u2019s.<\/p>\n
Importantly, failure to comply with FICA\u2019s requirements may result in steep penalties, including the imposition of fines and imprisonment. Indeed, the FIC has repeatedly emphasised the necessity of compliance \u2013 and the consequences of non-adherence. As a result, accountable institutions are increasingly sanctioned for non-compliance.<\/p>\n