FICA Verification
Also known as: KYC, Know Your Customer, Client Identification and Verification.
What is FICA Verification?
FICA verification is the process by which accountable institutions identify and verify their clients under the Financial Intelligence Centre Act 38 of 2001 before establishing a business relationship or concluding a single transaction above the prescribed threshold. Under the risk-based approach, verification depth varies with client and product risk.
Drafted and reviewed by
Attorney & Founder, My-Contracts.co.za · Legal Practice Council of South Africa (LPC F17333)
Definition and context
FICA verification is the client identification and verification duty imposed by sections 21 to 21H of the Financial Intelligence Centre Act 38 of 2001 (FICA), as amended by the Financial Intelligence Centre Amendment Act 1 of 2017 and subsequent amendments. Every "accountable institution" listed in Schedule 1 — including banks, attorneys, estate agents, auditors, trust service providers, forex dealers, motor-vehicle dealers (since 2022) and, increasingly, crypto asset service providers — must establish and verify the identity of each client before establishing a business relationship or concluding a single transaction exceeding the prescribed threshold.
The 2017 amendments replaced the rigid "list of documents" regime with a risk-based approach (RBA). Under sections 21A–21H, the accountable institution must (i) identify the client and beneficial owners, (ii) verify identity using reliable independent documentary or data source evidence, (iii) establish the purpose and intended nature of the relationship, (iv) conduct ongoing due diligence, and (v) apply enhanced measures to higher-risk clients (politically exposed persons, non-resident clients, high-risk jurisdictions). Each accountable institution must adopt a Risk Management and Compliance Programme (RMCP) under section 42, approved by the board or equivalent, and must train staff under section 43 and appoint a compliance officer.
Non-compliance attracts severe consequences. The Financial Intelligence Centre and the various sector supervisors (Prudential Authority, FSCA, Legal Practice Council, Estate Agency Affairs Board) can impose administrative sanctions under Chapter 4 up to R10 million per contravention for natural persons and R50 million for juristic persons, and criminal sanctions up to 15 years\' imprisonment. South Africa\'s 2023 greylisting by the FATF has intensified enforcement; supervisors now routinely audit RMCPs, test CDD files and issue directives for remediation. Contract drafting in FICA-sensitive transactions typically includes a client warranty of the accuracy of supplied documentation and undertakings to update on material change.
Where this term lives in law
Financial Intelligence Centre Act 38 of 2001
Sections: 21, 21A, 21B, 21H, 28, 42, 43
Combats money laundering and the financing of terrorism through customer due diligence obligations.
Frequently asked questions
Who must perform FICA verification?
Every accountable institution listed in Schedule 1 to FICA — banks, attorneys, estate agents, auditors, forex dealers, motor-vehicle dealers, casinos, and (since 2022) crypto asset service providers, among others.
What is the risk-based approach?
An approach where the depth of identification, verification and ongoing monitoring varies with the assessed risk of money laundering, terror financing and proliferation financing. Higher-risk clients (PEPs, non-residents, high-cash businesses) trigger enhanced due diligence.
What documents are required?
FICA no longer mandates a specific document list. Commonly: SA ID, proof of residential address no older than three months, proof of source of funds for high-value transactions, and for entities the CIPC registration documents and beneficial-ownership register.
What is an RMCP?
A Risk Management and Compliance Programme under section 42 — the written framework adopted by each accountable institution setting out its client-risk assessment, CDD procedures, reporting mechanisms, staff training and record retention.
What is South Africa's FATF greylisting?
In February 2023 the Financial Action Task Force placed South Africa on its "grey list" of jurisdictions with strategic AML/CFT deficiencies. Remediation is under way; supervisors have intensified FICA enforcement as part of this remediation.
Contract templates using this term
3 templates reference FICA Verification.