Author: Michael Roberts
15 October 2020
Non-compliance could mean the end for estate agencies
Estate agencies could face financial and reputational ruin if they fail to meet their Financial Intelligence Centre Act (FICA) obligations. However, there is a growing urgency for estate agents to put the right processes in place to ensure compliance.
Amendments to the Financial Intelligence Centre Act require estate agents, as accountable institutions, to become fully compliant by adopting a risk-based approach to running their businesses.
As a sector identified as being vulnerable to money laundering and terrorist financing, estate agents must now comply with the obligation to ‘Know Your Customer’. They need to have a Risk Management and Compliance Programme (RMCP) in place that outlines the relevant policies and procedures that owners, management and staff need to follow.
Buying and selling property is a particularly easy way to launder cash, which is why estate agents have been brought into the review. Agents need to understand their client’s source of wealth: where the money is coming from, and how their client obtained the cash or funds to buy a particular property.
For many companies, ensuring compliance can feel overwhelming. This is what prompted Khonology to develop NaviGuard, an easy-to-implement software solution that simplifies the process and helps protect companies from potential penalties of millions of rands and possible financial ruin.
Khonology focuses on creating technology that enables transformation and is very much service and solutions-oriented. We build solutions for our clients and it’s all about problem-solving.
Know Your Customer
The principle behind ‘Know Your Customer’ is knowing who whom you are doing business. NaviGuard helps validate that the client is who they say they are. This is verified through third party data and trusted sources.
Khonology has built a workflow process and controls to collect the required information, putting it in the right format and storing it correctly so that it is private and protected, and can’t be misused.
The very reason why money laundering is such a big problem in South Africa right now, is because people aren’t doing due diligence. No one is checking and verifying that someone is who they say they are.
And while the various protocols might seem daunting, with expert know-how and the right support and direction, that burden can be significantly eased with NaviGuard.
The solution was designed to support this industry to become compliant and take away the headache around this process.
NaviGuard has three solutions offerings: educating and training staff around requirements; a software package that enables estate agents to follow the correct procedures; or a fully managed service where Khonology becomes an augmented service provider.
For staff education, NaviGuard offers training workshops where the compliance requirements are outlined as well as giving teams an understanding of why meeting these obligations is so important.
A risk-based approach means everyone in your company needs to understand what the policy is about. You’ve got to have a structure where everyone knows why it’s important, what we are doing it for, what we are trying to avert, what we are looking for.
Khonology teaches you how to look out for the tell-tale signs. Teams need a context, otherwise it’s a moot point. NaviGuard is also able to train compliance officers, if that is what a company requires.
As a service provider, NaviGuard then offers software that can be quickly implemented so that agencies have the tool to do all the correct checks. NaviGuard has all of the guide rails built in. There are no assumptions. We will teach you and train you, our on-boarding is thorough. Then there is the option of either standard or premium support.
Importance of shifting to digital
Companies have to move away from paper – it can easily get lost, destroyed or misplaced. We talk about ‘living’ data – you need to maintain it, keep it fresh. Part of NaviGuard’s offering is the refresh cycle: making sure the data is up to date. One can no longer just put a document in a file and forget about it. One needs to check it, update it. It becomes a living document.
The most comprehensive solution is NaviGuard’s fully managed service. It is built off a knowledge base that takes over and manages all client checking. Khonology does all the work for you. Send us a service request and we will speak to the client on your behalf and ask for all the documentation. We become an augmented service provider.
Fraudsters are often adept at setting up clients. They will offer documents upfront and be super helpful. We tend to take people at face value because we are trusting by default. There are so many random variations of documentation, and that’s where people get caught out because it looks real: it has the stamps and the watermarks.
NaviGuard’s thorough systems circumvent human error. It was also built specifically with the aim of removing the barrier of entry for small and medium enterprises so that they can have access to a service that is trusted and validated at an affordable cost, with local support.
Expect more vigorous policing
Compliance is an overhead and a cost of doing business, but if you do it right is can also become a value proposition. The ability to be above board, and to maintain the quality of your data can become a differentiator. It enables you to protect your brand.
We anticipate more vigorous policing by FICA to ensure agencies have the correct RMCP procedures in place and that they are being followed through, implemented and reported on. This underlines the urgency to ensure estate agencies are compliant, otherwise they risk trade restrictions, fines topping tens of millions of rand, and reputational ruin.
Going it alone will only get you to a certain point. But for regulation compliance “I tried” isn’t good enough. NaviGuard is about offering estate agents protection. We are the specialists, let us do this for you. And let your agents get on with doing what they do best, which is selling property.
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