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FIC Act FIC Act Compliance (CDD, AML/CFT, Reporting)
A client wants to invest R90 000 in cash. He arranges for three relatives each to deposit R30 000 in banknotes into his investment account on the same morning, and each relative says the money is 'for him'. What should the accountable institution do?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) File a suspicious transaction report, because the cash appears split to avoid reporting.Correct
- b) Refuse the deposits and warn the client that using relatives in this way is an offence.
- c) Nothing, because each deposit was made by a different person and each is below the threshold.
- d) Ask each relative to sign a declaration and then treat the three deposits as unconnected.
Why this is the answer
Using several people to break one sum into smaller cash amounts is a recognised way of avoiding the cash threshold. A transaction that appears structured to avoid a reporting duty must be reported as suspicious, whoever physically makes the deposits. Warning the client would be tipping off, and paperwork from the relatives does not remove the suspicion.
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