South African accountants and accounting firms are accountable institutions under FICA when they provide certain categories of service. Not all accounting services trigger FICA obligations — the key is whether the accountant is providing services that could be used to facilitate money laundering. This guide explains which services trigger accountable institution status and what KYC is required.
Which Accounting Services Trigger FICA Obligations?
Schedule 1 of FICA includes accountants who provide the following services as a regular feature of their business:
- Buying and selling of immovable property on behalf of a client
- Managing client money, securities, or other assets
- Management of bank, savings, or securities accounts
- Organisation of contributions for the creation, operation, or management of companies
- Creation, operation, or management of legal persons or arrangements, and buying and selling of business entities
Standard audit, tax, and bookkeeping services do not by themselves trigger accountable institution status. However, if an accountant provides any of the above services — even occasionally — they become an accountable institution for those services.
CDD for Accounting Clients
When an accountant provides a triggering service, they must conduct Customer Due Diligence (CDD) on the client before providing the service. This includes verifying the client's identity, identifying the beneficial owners of any legal entity client, and understanding the nature and purpose of the service being provided.
Accountants must also apply the risk-based approach to assess the money laundering risk of each client and each service. Higher-risk clients — such as those with complex ownership structures or those operating in high-risk industries — require Enhanced Due Diligence (EDD).
Suspicious Transaction Reporting
Accountants who are accountable institutions must file a Suspicious Transaction Report (STR) with the FIC if they form a suspicion that a transaction involves the proceeds of crime or is related to terrorist financing. The obligation to report arises even if the transaction does not proceed.
Frequently Asked Questions
- Does a small accounting practice need to comply with FICA?
- If the practice provides any of the triggering services listed in Schedule 1 of FICA, it is an accountable institution regardless of its size. There is no size exemption.
- Does an auditor need to conduct KYC on audit clients?
- Standard audit services do not trigger accountable institution status under FICA. However, if the auditor also provides other services (such as managing client funds or setting up companies), those services may trigger FICA obligations.
- What is the penalty for an accountant who fails to conduct KYC?
- The FIC can impose administrative sanctions, including financial penalties of up to R10 million per contravention. Professional bodies such as SAICA and SAIPA may also take disciplinary action.
- Must an accountant keep KYC records?
- Yes. Under FICA Section 22, accountants must keep records of all customer identification documents and transaction records for a minimum of five years after the end of the business relationship.
- Does FICA apply to foreign accountants working in South Africa?
- Yes. FICA applies to all accountable institutions that carry on business in South Africa, regardless of whether they are South African citizens or registered in South Africa.
Ready to Prepare Your KYC Package?
Use the sector-specific FICA compliance checklist for Accountants to ensure every required document and control is in place before your next FIC inspection or client onboarding.
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