Financial Crime World

Know Your Customer Regulations Crucial for Business Compliance in South Africa

In an effort to combat financial crimes such as money laundering, tax evasion, and terrorist financing, the Financial Intelligence Centre Act (FICA) of South Africa has introduced know your customer (KYC) regulations.

What are KYC Regulations?

The principle of KYC encourages businesses to establish and verify the identity of their customers and clients before or during the course of doing business. This ensures that financial institutions, attorneys, trustees and executors, estate agents, trade and stock brokers, and management companies comply with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.

Compliance Requirements

Under FICA, businesses are required to:

  • Establish and verify the identity of all clients before instituting a business relationship or concluding any transaction
  • Incorporate various measures into their due diligence practices, including:
    • Collecting and verifying identity documentation
    • Screening against warning lists
    • Customer risk assessment
    • Investigations into customers’ financial transactions

Easy Compliance with LexisNexis SA

LexisNexis SA has introduced a user-friendly solution that enables businesses to establish and verify the identity of clients while conducting risk assessments. The solution includes:

  • A built-in risk assessment matrix
  • The ability for clients to create their own compliance risk questionnaire

Rudi Kruger, General Manager of Risk Management & International Online Services at LexisNexis SA, emphasized the importance of knowing relevant information about customers: “Economic crime is a serious offence and those found to be in business with suspicious entities face massive fines and the threat of a prison sentence.”

Benefits of KYC Verification

Kruger highlighted the benefits of KYC verification steps:

  • Preventing involvement with criminal economic activities
  • Fulfilling due diligence obligations
  • Using online solutions, such as Lexis Diligence, to assist with due diligence

Lexis Diligence is an online tool that provides access to:

  • Over 40 years of archived comprehensive adverse news, sanctions, and warning lists
  • Country information and on-the-ground media reports for monitoring and assessing potential security threats abroad

The benefits of choosing Lexis Diligence include:

  • Increased business efficiency
  • Less financial risk
  • Ongoing regulatory compliance
  • Reputation protection

For more information, visit https://www.lexisnexis.co.za/nexisdiligence.