South African Banks Given Permission To Apply For Extension To KYC Deadline

by Robert Lee, for LawAndTax-News.com, London

17 May 2004

Following the expression of concerns by the South African Banking Council that the June 30 deadline for the verification of personal information on existing bank clients was unlikely to be met, the Financial Intelligence Centre (FIC) showed a little leniency, granting banks which thought themselves unlikely to meet the deadline until the end of last week to come forward and request an extension.

Under the 2001 Financial Intelligence Centre Act 38, banks and other "accountable" institutions, such as casinos, law firms, and estate agencies, were, from June 30 2003, obliged to verify the identity and residence of new clients before proceeding with transactions. The affected institutions were also obliged to provide such data for their existing clients, but were given until the end of June 2004 to do so.

The law stipulates that should the banks not receive the necessary information from their customers, they must freeze the 'questionable' accounts until such time as verification of the account holder's identity is obtained.

Speaking to reporters last Wednesday, acting director of the FIC, Murray Michell explained that extension requests would need to be thoroughly justified, announcing that:

"Banks need to explain what they've been doing and what kind of obstacles they've come up against."

He went on to add that they would additionally need to confirm "what volume of information concerning existing clients is outstanding and unverified".

It is not yet known how many of South Africa's banks and financial institutions approached the Financial Intelligence Centre with a view to taking up this offer.

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