Why you should care about FICA when you invest

Are you frustrated by all the personal documents required for investing? Here’s why they’re important.

“Update your details”… The dreaded words that mean you now have to dig around in your filing cabinet for a variety of documents and forms that prove you are who you say you are, and live where you say you live. They’re part of the requirements legislated by FICA (the Financial Intelligence Centre Act), which was introduced in 2001 with the aim of combatting money laundering (where money gained through illegal activities is channelled into different sources to make it appear legitimate) and financing of terrorism.

FICA is a term that’s been in the news lately, as a number of high-profile business people have had banking transactions flagged for allegedly falling foul of these regulations. Among FICA’s requirements is that financial institutions verify the identities of people investing money and the people representing the investors, identify the source of the investment and analyse the profile of investors for so-called suspicious transactions. Accountable institutions have the right to deny or terminate business relationships or transactions if the FICA requirements are not met.

While FICA documentation may be a drag on your patience and time, it is there to ensure you stay on the right side of the law, too. The legislation is also critical to South Africa’s ability to participate in international financial markets. In short, it is keeping the financial system safe from the “bad guys”.

So exactly what information do you need to provide?
When you apply to invest in a unit trust or any other financial transaction, you must supply the following:

1. A clear copy of a utility bill (not older than three months) reflecting your name and physical (not postal) address
2. A copy of a SARS correspondence reflecting your name and income tax number
3. A recent bank statement (not older than three months) reflecting your name and bank account
4. Proof of payment if your money is not being collected electronically from your bank account.

It’s important that when your details change, you ensure your FICA documents are kept up to date. You need to notify the applicable accountable institutions so they can update your information in the FICA database.

As a responsible South African corporate citizen, Prudential supports this ongoing process. Going forward, we know that legislation must continue to change as the “bad guys” find ways around the existing rules, and we and you, the “good guys”, have to work harder to keep the dirty money out of our systems. Keep this in mind the next time you have to provide your information for an investment or other financial transaction.

If you aren't already investing with us, contact your financial adviser or our Client Services team on 0860 105 775 or at info@prudential.co.za.