Do you give a FICA?

Do you give a FICA?

You and your business can help fight terrorism , drug trafficking and organised crime by being FICA prepared and proving that you are not party to any criminal or money laundering activity.

It is estimated that nearly one trillion US dollars is laundered annually worldwide to fund terrorists and criminals in their illicit and corrupt activities. Money laundering is the process of turning illicit cash into a legal asset as a means of hiding the actual source of criminal proceeds and creating a perception of legitimacy.  Alternatively legal funds are transferred into an asset which can then be used to fund terrorism and other criminal activities.

Money laundering is a complex and fascinating process that includes:

• Smurfing – this basically entails the deconstruction of large amounts of money into smaller, less obvious amounts and dispersed over a number of bank accounts, by a number of people over a period of time
• Using bank friendly countries –  offshore banks that maintain a policy of secrecy are used to create an intricate web of bank transfers to dilute the original source of illegal funds
• Underground banking systems – certain Asian countries have unregulated banking systems, ironically built on trust, allowing for undocumented deposits, withdrawals and transfers. These banks are extremely useful in the process of money laundering.
• Shell companies – companies are created specifically to trade in such a way as to launder the illegal proceeds of various criminal activities.  They receipt “dirty” money in payment of supposed goods or services and create the perception of a legitimate business by creating a set of financials reflecting these “dummy”  transactions
• Investing in legitimate business – “dirty’ money is used to invest in any number of legitimate businesses where the source of the finance is not questioned.  The term “money laundering” in fact comes from the days when the Mafia used “clean” businesses such as laundries as a means to recycle the funds from criminal activities.  Casinos, the gaming industry (particularly where the odds have been fixed) and brokerage firms handling large amounts of money are targeted as much as small, cash-intensive businesses such as bars, supermarkets and cafes. The proceeds of these ill-gotten gains are then recycled into the system as “clean” money. 
• Immovable property – the purchase and resale of immovable property with “dirty” money is one of the simpler ways of laundering illegal money to make it appear as a legitimate income stream.  Other means are the cancellation of a sale and subsequent refund of the “dirty” deposit into “clean” money or the seller agreeing to a lower price on paper, with the balance bring paid in “dirty” cash.

FICA’ing clients is compulsory for accountable businesses such as financial institutions, lawyers, accountants and estate agents.  So, the next time you are asked for your FICA documents, act responsibly, have them ready at all times and give your FICA.   You can help make a difference !

References:

Mazars Forensic Services (Pty) Ltd – December 2011:  http://www.mazars.co.za

KPMG – Power Point Presentation - www.eaab.org.za/download.php?data_id=110