How do money laundering regulations affect me as a tenant or landlord?

AUGUST 29, 2016

Whether you are looking to buy, sell, let or rent a property, you will find that your estate agent will ask you for proof of identity and proof of residential address.

So, if you have been asked for these, there’s no need for concern -  the South African Reserve Bank have put certain controls in place through the introduction of the Financial Intelligence Centre Act, No. 38 of 2001, better known as FICA to effectively fight money laundering and combating the financing of terrorism.  In terms of FICA, estate agents are required to verify customers’ details by collecting supporting documents.  

Here, Chas Everitt Nelson Mandela Bay’s Principal Charlotte Vermaak looks at what money laundering is and how it affects landlords, tenants, sellers and buyers alike.

What is money laundering?

Money laundering is where criminally obtained money or assets are exchanged for ‘clean’ money, i.e. the process of taking the proceeds of criminal activity and making them appear legal. Property transactions are a known target for this illegal activity, so all relevant businesses must have appropriate anti-money laundering (AML) systems in place.

What does this mean if I am a landlord, a seller or a buyer?

For landlords, sellers and buyers, this means that your estate agent is legally obliged to obtain proof of your identity and proof of your address.

Estate agents will also require sight of all original documents or alternatively, certified copies. Where providing original identity documents they will need to be seen in the presence of the document holder.

What does this mean if I am a tenant?

Tenants must also provide the same proof of identity and proof of address, which is a standard part of the referencing process. Where the tenant is a group, each individual adult occupant will be required to provide identity documents. Where applicable, a tenant will also have to prove their source of funds, especially any cash payments or funds transfers from overseas. It is important to note too, that in order to complete a Rental Application prior to granting tenancy, the provided tenant ID documents must be the originals seen in person, in the presence of the document holder.

What are acceptable FICA documents?

 A copy of your green barcoded ID or the newly introduced Smart ID card would suffice.  An original copy of your proof of residential address that shows your physical address, not a post box - a utility bill such as municipal account statement, retail account statement, cell phone statement, provisional bank statement etc. is acceptable. Depending on individual circumstances, estate agents may require further/other documentation.