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SA Banks Struggle To Meet KYC Deadline

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

11 May 2004


Despite the gargantuan efforts being made by the South African banking sector, experts have suggested that it is highly unlikely that the June 30 deadline for the verification of personal information on existing bank clients will be met.

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.

However, speaking to the South African Press Agency this week, SA Banking Council spokeswoman, Claire Gebhardt-Mann revealed that the banking sector is adamant that accounts will not be frozen, observing that: "It would be total chaos".

She went on to explain that the Banking Council has asked the government for an extension of the deadline.

Critics of the Know Your Customer (KYC) initiative have suggested that the South African government's demands for proof of residence and identity are unnecessarily stringent, especially given that many of the country's poorest residents do not necessarily have a fixed residential address, or subscribe to the services that the government will accept bills from as proof of residence.


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