RELIANCE ON CUSTOMER DUE DILIGENCE PERFORMED BY ANOTHER ACCOUNTABLE INSTITUTION
Exemption 4 (b) of the exemptions made under the Financial Intelligence Centre Act (FIC Act), provided for the reliance by one Accountable Institution (the Secondary Accountable Institution) on the identification, verification and certain record keeping requirements required by the FIC Act by another Accountable Institution (the Primary Accountable Institution). Exemption 4 required the Primary Accountable Institution to confirm in writing, and to the satisfaction of the Second Accountable Institution, that it had established and verified the identity of the client and kept record of the identification process.
Although Exemption 4 (b) has now been withdrawn, the concept is included implicitly in the provisions of the FIC Act. Written reliance on customer due diligence performed by another Accountable Institution is relevant where one Accountable Institution introduces business to the other Accountable Institution and the client of the Primary Accountable Institution also becomes a client of the Secondary Accountable Institution. The concept is intended to avoid a duplication of customer due diligence.
ICS has prepared a specimen document (which was sent to you under cover of a Compliance Update) which may be used by our clients where an Accountable Institution relies on the customer due diligence performed by another Accountable Institution. The specimen document is merely an example of what we believe may be required in terms of the FIC Act and clients do not have to use this format.
Please note that the reliance on customer due diligence performed by another Accountable Institution
– does not exempt the Secondary Accountable Institution from keeping record of all transactional information and account details;
– does not exempt the Primary or Secondary Accountable Institution from their reporting obligations in terms of the FIC Act.
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