FICA is a set of regulations designed to prevent money laundering and terrorist financing. It requires businesses to identify and verify the identities of their clients, keep records of their transactions, and report any suspicious activities to the Financial Intelligence Centre (FIC).
Firstly, FICA requires client due diligence which involves understanding your clients and their businesses. When properly implemented, these measures help manage client relationships and detect potential misuse of products and services for money laundering or terrorist financing.
Advisers can achieve this by assigning a risk rating to each client during onboarding, to assess their risk for money laundering or terrorist financing. They can then use this rating to apply a suitable level of client due diligence, choosing between a simplified or enhanced process.
FICA further requires a Financial Services Provider to perform ongoing due diligence. The Financial Action Task Force (FATF) emphasises, in its risk-based approach guidance, that businesses must continuously conduct due diligence on their clients throughout the business relationship, as individual risk profiles may change over time.
Knowing your clients, will help you to assess any specific risks that they may bring to you as well as your service provider’s business and is therefore a crucial and important part of the financial advice process.
1Life takes the responsibility to comply with the required FICA client screening responsibilities very seriously. We ensure that we perform the required screening on all newly onboarded policyholders, but also on current policyholders. It is however important that all financial advisers ensure that they have the required screening and due diligence processes in place to comply with the FICA requirements within their practice.
If you are a financial adviser and need more guidance or have concerns with regards to complying to the Act, please contact your appointed AML Compliance Officer.