Estate agents play a key part in combatting money laundering and terrorist financing, by submitting information that can lead to successful prosecution by the authorities
WORDS & IMAGES: SUPPLIED
Estate agencies are listed in the Financial Intelligence Centre Act (FIC Act) as accountable institutions and are required to fulfil various compliance obligations.
These requirements include registering with the Financial Intelligence Centre (FIC), and submitting various regulatory reports to the FIC including suspicious and unusual transactions, cash threshold and terrorist property reports.
The FIC uses the information contained in these reports for conducting analysis and, where necessary, the production of financial intelligence reports. In turn, law enforcement and prosecutorial authorities use these reports for their investigations and applications for asset forfeiture.
What is money laundering?
Money laundering is the term used to describe the process where criminals hide, conceal or disguise the nature, source and location of their proceeds from unlawful activities and/or any interest anyone has in such illicit proceeds.
Suspicious and unusual transaction reports (STRs)
Where an estate agent believes a transaction is not above board, they must file an STR to the FIC, without tipping off the client.
An example of a possibly suspicious or unusual transaction could be where an employed client pays a reasonable rental amount each month. Then, suddenly, the client makes a lump sum payment of six months’ rental in advance. The estate agent should consider whether the lump sum payment is in line with the client’s stated source of the funds and transaction history. Where the payment is not, it could be a red flag and spark suspicion.
All businesses must raise their levels of awareness and vigilance about money flowing through their company or when they facilitate the transfer of funds. In doing so they contribute to the fight against financial crime in South Africa.
The experience and understanding estate agents have of their industry and of typical client behaviour are important to enable this sector to see when transactions or activities seem out of the ordinary.
To further assist estate agents to better understand the money laundering and terrorist financing risks this sector faces, the FIC publishes trends, typologies and case studies on its website.
All STR reports in terms of section 29 of the FIC Act must be filed within 15 days of suspicions arising. Estate agents should read Guidance Note 4B, which is available on the FIC website.
Cash threshold reports (CTRs)
Cash threshold reporting in terms of section 28 of the FIC Act requires estate agents to submit reports on all cash transactions of R24,999.99 and above. Estate agents must also file reports on aggregated cash transactions amounting to R24,999.99 or more. While the aggregation period is not specified, the FIC recommends that a period of at least 24 hours be applied when considering aggregation.
All cash threshold reports must be filed with the FIC as soon as possible but no later than two days after the estate agency or any of their employees becomes aware of a cash transaction or series of cash transactions that have exceeded the prescribed threshold. Estate agents should read Guidance Note 5B in this regard.
Terrorist property reports (TPRs)
Another regulatory reporting obligation, a TPR, relates to section 28A of the FIC Act. To comply with this obligation, an estate agent and all other accountable institutions must report to the FIC any property under its control, or which is known to be connected to the financing of terrorist activities.
The estate agent must file a TPR with the FIC as soon as possible, but no later than five days after the estate agent or their employees become aware of the fact that the property is connected to terrorist financing.
Where the estate agent files a TPR, they should not process any transactions related to that property or any sanctioned person or entity. Estate agents should read Guidance Note 6A and Public Compliance Communication 44 in this regard.
Receiving reports from estate agents is vital in the fight against money laundering and terrorist financing.
To this end, estate agents must comply with their obligations in terms of the FIC Act and the Money Laundering and Terrorist Financing Control Regulations and file reports on time.
See for yourself
The FIC publishes public compliance communications, guidance notes and reporting user guides on the FIC website.