Want to work in finance? Make sure you understand FICA
FICA. You may have heard this term at your bank or in the media, but do you know what it stands for? If you want to work in finance, then FICA is something you definitely need to familiarise yourself with! Here’s a breakdown of what FICA entails and why it’s so important for an aspiring finance professional to understand it.
What is FICA?
The Financial Intelligence Centre Act (FICA) was introduced by the South African government in 2001 in order to fight crimes such as money laundering, tax evasion, and other unlawful financial activities.
In terms of FICA, all financial institutions are required to keep records of all transactions and to report any suspected money laundering and other suspicious activities (such as tax evasion) to authorities. The identities of all clients also have to be verified before entering into a business relationship or concluding a transaction.
All South Africans have to be FICA compliant in order to carry out activities such as opening bank accounts, taking out insurance, investing in shares, applying for store credit, or signing up for cell phone contracts. Individuals are required to submit information such as ID documents and proof of residence to be verified. Businesses need to provide their registration numbers, annual financial statements, and address details in order to be verified.
Why do finance professionals need to know about FICA?
When you’re working in finance, you will need a sound knowledge of the Act so that you can play your part in ensuring that your company adheres to the legal requirements of FICA. You also need to be able to explain the FICA regulations to clients and to answer any questions they have about the Act.
In addition, FICA provides explanations on financial crimes such as money laundering, equipping you with a better understanding of what to look out for when you’re doing business with clients. Money laundering refers to the process that criminals use to hide, conceal or disguise the nature, source, location or movement of money earned from unlawful activities. As a finance professional, you are required to report any such transactions to the authorities, so an understanding of the Act is crucial.
Which finance professionals need knowledge of FICA?
You’ll need a working understanding of FICA if you aim to pursue one of the following professions:
- Attorneys, as defined in the Attorneys Act
- Estate agents, as defined in the Estate Agency Affairs Act
- Bank employees
- Loan officers
- Financial consultants
- Tax practitioners
- Financial managers
- Long-term insurance providers
- Any registered financial services providers
If you work, or plan to work, in the financial field, consider studying the following short course to familiarise yourself with your obligations in terms of FICA: