But some tweaking needed
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.