Good in­ten­tions

But some tweak­ing needed

Finweek English Edition - - MONEYCLINIC - LEANI WES­SELS leaniw@fin­

FICA HAS be­come a swear word for any­one whose proof of res­i­dence has been re­jected by the bank – your con­stantly mov­ing, ad­min-averse writer in­cluded. Who else isn’t able to open a bank ac­count? Any­one liv­ing in an un­marked, in­for­mal area, or is at the mercy of a land­lord that ei­ther doesn’t want the tax authorities to know he’s earn­ing rent or has an eye for a quick buck. The most vul­ner­a­ble of our so­ci­ety, in other words.

Ac­cord­ing to in­dus­try play­ers, frus­tra­tion stems from the com­pli­ance of­fi­cers em­ployed by the banks as re­quired by the Act. Ac­cord­ing to sec­tion 45 of the Act, along with the com­pany’s board and se­nior man­age­ment, com­pli­ance of­fi­cers are per­son­ally li­able for any trans­gres­sions.

These of­fi­cers, in terms of the law, en­sure the bank meets the re­quire­ments as laid out in the Act.

Ac­cord­ing to Brian Richard­son of cell­phone banker Wizzit, a divi­sion of the South African Bank of Athens, this per­sonal li­a­bil­ity means com­pli­ance of­fi­cers of­ten over­look a sec­tion of the act that specif­i­cally aims to in­clude the low­est earn­ers in the econ­omy, for fear of mak­ing a ca­reer-end­ing or costly mis­take.

Ac­cord­ing to ex­emp­tion 17, South African cit­i­zens with bank bal­ances un­der R25 000 and a trans­ac­tion limit of R5 000 per day don’t need proof of res­i­dence to open a bank ac­count.

Once this limit is reached, says Richard­son, Wizzit clients re­ceive a no­tice to sub­mit the rest of their Fica doc­u­ments. Ac­cord­ing to Richard­son, many banks are not ac­tively pro­mot­ing this ex­emp­tion, and this acts as a bar­rier and pre­vents the poor­est de­mo­graphic from open­ing bank ac­counts.

There’s no doubt the Fi­nan­cial In­tel­li­gence Com­mis­sion has teeth. It can fine or­gan­i­sa­tions up to R100m.

How­ever, the Fi­nan­cial In­tel­li­gence Cen­tre’s Di­rec­tor, Mur­ray Michell, dis­agrees that com­pli­ance of­fi­cers’ per­sonal li­a­bil­ity leads to the nar­row in­ter­pre­ta­tion of the law.

Ac­cord­ing to Michell, banks are not ap­ply­ing the law with suf­fi­cient in­sight. “It is be­ing ap­plied un­evenly and nar­rowly,” he says.

“Banks, and here I am gen­er­al­is­ing, don’t have the sys­tems that can pro­vide a sin­gle view of their cus­tomers that can show that the cus­tomer may have a home loan, a money mar­ket ac­count and credit cards at the same time in the same in­sti­tu­tion.

As a re­sult, cus­tomers have to ful­fil Fica obli­ga­tions and pro­vide ver­i­fi­able data ev­ery time they wish to open up a bank ac­count or use a new bank prod­uct,” says Michell.

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