FICA compliance assists businesses with mitigating financial and reputational risk in an age where money laundering and consumer fraud is an ever-rising concern. The FICA process ensures that credit is being extended to legitimate customers who are who they say they are. Verification of various data points allows businesses the opportunity to know their customers, and have data at hand with which to make informed, risk-based, onboarding decisions.

However, the word “FICA” makes consumers shudder – it involves cumbersome, time-consuming processes where multiple documents are required to verify personal data. This is why businesses are opting for eFICA solutions – to alleviate friction without compromising on security.

The entire FICA process can now be digitised through integrating real-time software solutions. This is what we like to call eFICA: An electronic FICA process. The benefits, for businesses and consumers alike, are multifold. Businesses are now able to satisfy their customers’ demands while safeguarding their businesses against fraudsters and money launderers. It’s a win-win solution.

What is FICA?

The South African government introduced the Financial Intelligence Centre Act (“FICA”) in 2001, which was followed by the Amendment Act in 2010 to combat money laundering and the financing of terrorism. FICA measures are thereby put in place to verify customers and detect financial criminals before a business relationship can be established and transactions processed.

The FICA customer identification and verification process involve a customer’s identity and personal information to be verified through the provision of select documents. At the very least, proof of identity and proof of address is required. Therefore, a customer would typically need to be physically present with their ID card/book, and a printed proof of address.

What is eFICA?

eFICA removes the human aspect of authenticating documents through naked-eye checks. Digital means to verify information online, in real-time, and from anywhere, is readily available.

Sophisticated software that is linked directly to independent sources such as the Department of Home Affairs, commercial banks and credit bureaus can verify this information. Obtained from trusted, independent sources, the information’s authenticity is automatically confirmed.

Digital means to prove identity

Identity documents can be stolen, tampered with, misrepresented and forged. The consequences of accepting such ID documents, and mistaking them as being valid, compromises compliance and makes businesses conduits to criminal fraudulent activities, which could lead to reputational damage. Accepting ID documents at face value can be problematic as criminals have advanced their falsifying methods. An independent source of verification is, therefore, necessary to combat such risks. An additional issue with the traditional process includes the requirement of the physical presence of applicants. Applicants having to schlep a pile of paperwork to stores and branches is quickly becoming a thing of the past.

Identity Verification Services (IVS), serve to verify identity information through cross-checking it against the data stored on the Department of Home Affairs database. The digital submission of an applicant’s ID number will instantaneously retrieve valuable data confirming, or refuting true identity. Such data includes the ID number validity, the ID photo, and various other data points such as marital status, deceased status etc. With this valuable information, businesses can confirm applicant identities from anywhere without having to rely on physical presence, manual checks, paperwork and human intervention that leaves room for error.

IVS ensures that the identity verification part of FICA requirements can be completed in seconds, with 100% accuracy, and from any location.

Digital means to prove physical address

A variety of documents are acceptable to verify an applicant’s proof of address – the FICA Amendment Act allows institutions to apply a risk-based approach in determining acceptable documents commensurate with the customer’s risk profile. The most commonly used documents to verify physical addresses are bank statements. Several institutions require such documents in physically certified paper format. This often results in an additional cost to the customer. The digital option cuts this entire tedious chore out of the process.

Nowadays, three months bank statements can be obtained digitally and in real-time. Applicant bank statement requests can be initiated in seconds by entering the applicant ID numbers and cellphone numbers into the application. Upon this initiation, the applicants will receive a USSD prompt on their cellphones which leads them to a portal interface. They are then at liberty to choose which bank account statements they would like to share with the business. Such statements, retrieved straight from the applicants’ bank, are sent to the merchant’s system, supplying them with authentic proof of address.

The digital option not only eliminates onboarding friction for the applicant but also prevents the chance of document forgery. The three months bank statements can also serve as a source of funds verification, which is a key component in the Know Your Customer (KYC) process prescribed by FICA.

eFICA in a competitive market

A business that can offer customers convenience, security, and flexibility through real-time remote eFICA services, has a strong competitive advantage. Printing, scanning, collecting, manual verification, certifying, and filing are redundant process steps in a digital age. eFICA enhances the customer experience without compromising on the robustness of the verification process.

Faster, safer onboarding means faster growth of your customer base, and essentially your business in its entirety. With the means to digitally retrieve and validate the required personal information for FICA compliance, businesses are eliminating friction from the onboarding process, solidifying robust verification methods, and setting themselves apart from the rest.

Are you ready to digitise your FICA process?