Question:
What is FICA and how do they influence banking transactions? According to analysts how much of our salary are we expected to save each month? What is the NCA?

Answer:
The Financial Intelligence Centre Act (FICA)

Internationally, governments have agreed to fight organised crime and terrorism by seizing the proceeds of crime and making money laundering a criminal offence. Since the 1980s many countries have passed laws that demonstrate their commitment to this effort.

South Africa has also adopted money laundering laws to help it comply with its international obligations to fight organised crime and terrorism.

FICA creates money laundering control obligations for banks and other institutions like insurance companies as well as for professionals such as estate agents, brokers and attorneys.

Customer identification is a crucial element of any effective money laundering control system. Banks must implement reasonable measures for them to know who their customers are and to prevent criminals from using false or stolen identities to gain access to banking services.

Since 1 July 2003 banks are required to obtain certain information and supporting documents from new customers before accounts can be opened. FICA also required that banks re-identify their existing customers.

By now you should have supplied your bank with documents that allow them to verify your identity.

How much should you save?

Most experts agree that you should save 20 to 25 percent of your pre-tax income for 20 to 25 years in order to retire financially independent. Of course this depends on the lifestyle you want to achieve. You will need more if you want to travel around the world and less if a hut in the bush will suffice.

The National Credit Act (NCA)

The National Credit Act was put in place to protect the consumers of credit. Two new regulatory institutions have been established to administer the NCA. Firstly, The National Credit Regulator (NCR) is the administrative regulator dealing with issues such as research and policy development, registration of industry participants and investigation of serious complaints. The NCR will take responsibility for the enforcement of the NCA. The National Consumer Tribunal (NCT) will conduct hearings into complaints relating to the NCA.

The NCA aims to:

  • Ensure credit providers lend in a responsible manner.
  • Prevent consumers committing themselves to more than they can repay.
  • Protect consumers, regulate the granting of credit as well as prevent over indebtedness and reckless credit. The NCA introduces such concepts as a National Credit Regulator, a National Consumer Tribunal and a debt counselling service.
  • Educate and help consumers make informed choices.