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FIC Act FIC Act Compliance (CDD, AML/CFT, Reporting)
A prospective client wants to invest R300 000 but cannot produce any document that verifies his identity, and becomes evasive when asked. What does the FIC Act require of the accountable institution?
RE5 practice question with a worked answer. This is one of hundreds of FSCA RE5 questions in the RegulatoryExams question bank.
- a) It may open the account in a provisional name until the identity of the client is verified.
- b) It may open the account, provided the identity documents are supplied within 30 days.
- c) It may not establish the relationship, and must consider a suspicious transaction report.Correct
- d) It must decline the business and explain that a report will be made to the Centre.
Why this is the answer
An institution that cannot establish and verify a client's identity may not establish a business relationship or conclude a transaction with that client, and must consider making a report under section 29. The Act also prohibits anonymous clients and clients with apparently false or fictitious names. Telling the client about a report would be tipping off.
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