FIC Act duties for estate agencies
What the FIC Act asks of a South African estate agency as an accountable institution, from its compliance programme to cash threshold reports.
By Achekam · · 5 min read · For Real estate businesses in South Africa
A buyer walks into the agency with a sports bag and says he would like to pay the deposit today, in notes. Most principals know instinctively that something about this is wrong. Fewer can say exactly what the law expects the agency to do next, or which documents it should already hold about that buyer.
South African estate agencies sit inside the anti-money-laundering system whether they like it or not. Property is an obvious place to park dirty money, and the agent is often the first professional to meet the buyer. This article sets out the duties the Financial Intelligence Centre describes for estate agents, with the cash-paying buyer in mind, and where Achekam helps with the paperwork.
Estate agents are accountable institutions
The Financial Intelligence Centre lists estate agents, as item 3, among the accountable institutions under the Financial Intelligence Centre Act. Its compliance pages list the accountable institution sectors subject to the Act's obligations, and estate agents appear there alongside legal practitioners, credit providers, high-value goods dealers, trust and company service providers, financial services providers and crypto asset service providers.
Who counts as an estate agent for this purpose is not left to guesswork. The FIC points to its Public Compliance Communication 56 (PCC 56), which sets out its interpretation of a property practitioner. If the agency's work goes beyond ordinary sales and rentals, for example into property management or development marketing, it is worth reading PCC 56 to see where the agency falls.
The FIC's page for estate agents gathers the guidance that applies to the property sector in one place, and is the page to bookmark.
A written programme and the returns that go with it
The FIC points estate agents to PCC 53, on Risk Management and Compliance Programmes, and to Directive 6 of 2023, on submitting risk and compliance returns. It has also published a revised sector risk assessment of the property sector.
In practical terms, the agency needs a written programme that says how it:
- identifies and verifies its clients, including buyers, sellers, landlords and tenants where the Act applies;
- decides which clients and transactions carry higher risk;
- keeps records of what it checked;
- recognises and reports cash and suspicious transactions;
- trains its agents and names the person responsible for compliance.
The programme is only useful if agents actually follow it. Keep it short enough that a new candidate practitioner can read it in their first week.
When a buyer wants to pay in cash
The FIC states that accountable institutions must file cash threshold reports on transactions where the cash received or issued exceeds R49 999.99, and refers to its Guidance Note 5C. That is the figure at the time of writing; check the FIC's current guidance before relying on it.
For the buyer with the sports bag, the agency's steps are roughly these:
- Do not accept the cash until the principal or compliance officer has been told.
- Make sure the buyer has been identified and verified under the agency's programme.
- If the agency does receive cash above the threshold, the transaction is reported to the FIC as a cash threshold report.
- Separately, the FIC says accountable institutions must report transactions that are unusual or arouse suspicion of money laundering or terrorist financing: as a suspicious transaction report if the transaction went ahead, or a suspicious activity report if it did not. A buyer who walks away when asked for identity documents can still be reportable.
- Record what was done and why, and keep it with the client's file.
Many agencies simply refuse cash deposits and ask for payment by bank transfer into the trust account named in the offer. That is a business choice; the reporting duty applies whenever cash above the threshold does change hands. Where the deposit lands in the agency's trust account, the trust account rules also apply; see section 54 trust accounts.
Companies, trusts and the people behind them
A fair share of property buyers and sellers are not individuals. They are companies, close corporations, partnerships and family trusts. The FIC states that accountable institutions must establish the beneficial owner of a client that is a legal person, partnership or trust, meaning the natural person who owns or exercises effective control over it, and take reasonable steps to verify that person's identity.
For a trust buying a townhouse, that means looking past the trust deed to the people who control it. For a company selling a block of flats, it means finding the individuals who own or run the company, not only the director who signs the mandate.
Sanctions screening at take-on and after
The FIC also states that accountable institutions must screen clients against the targeted financial sanctions list during client take-on, and again whenever the UN Security Council adopts new or expanded sanctions measures.
Achekam does not screen prospects or clients against sanctions or politically exposed person lists. The check stays with the agency's own compliance process, using the FIC's list, and the result should be recorded on the client's file.
Keeping the FICA file in order
Most of the work is documentary: copies of identity documents, proof of address, company and trust documents, the beneficial ownership record, the sanctions check and any reports made. In Achekam:
- Document Centre is a folder-based store where the agency uploads files or whole folders, tags, searches and archives them, and a new version keeps the earlier ones. A folder per client, with a standard set of sub-folders, keeps FICA documents together.
- Every stored file gets a SHA-256 fingerprint, executable files are refused by default, and every upload passes a malware check.
- Signing is tied to a known person. An e-signature envelope with a signer from outside the business must be linked to a client or a CRM lead before it is sent, so a mandate or an offer cannot go out for signature to someone the agency has no record of.
The FIC states that accountable institutions must keep records of client information, transactional information and regulatory reports for at least five years from the end of the business relationship, the conclusion of a once-off transaction or the submission of a report. Set the agency's own retention rule to match. The documents and the decisions remain the agency's responsibility; the system keeps them in one place. When the deal registers and commission flows through the conveyancer, the same client file supports the commission paperwork described in commission paid by the conveyancer.
Take the agency's current compliance programme off the shelf this month, read it against PCC 53, and add a short section on what agents must do when a buyer offers cash.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
