If FICA cannot prevent this kind of fraud then its use is questionable
The Big Issue is a non-profit magazine that is sold on street corners by people who are either homeless or on the precipice of homelessness. It is a well-known, much-loved brand. It is facing closure. FNB can stop that from happening.
As explained in an article we published today:
"On 6 June, The Big Issue received an email purporting to come from their printers, saying the printers were changing their bank account and sharing an FNB account verification letter, which was fake. Over the next three months, R600,000 was paid into this fraudulent account from The Big Issue's Standard Bank account. The error was discovered on 6 October. By then it was too late."
Of course such fraud should not have been able to happen, and The Big Issue needs to strengthen its internal controls to ensure it does not recur. But it is FNB's handling of the matter that troubles us more.
Anyone with a bank account has experienced the annoyance of the Financial Intelligence Centre Act (FICA) in which we have to prove to our bank who we are and where we live. Sometimes this is so invasive that a bank will send its employees to our home to verify we really live there.
ABSA's website explains the purpose of FICA:
"South Africa introduced FICA in 2001 to help fight financial crimes such as money laundering, the financing of terrorist activities, and to protect banking customers from such crimes."
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
Most of us, with considerable justification, have considered FICA to be yet another piece of pointless bureaucracy that invades our privacy and wastes our time.
In our article today, Roshan Jelal, Head of Fraud at FNB, says accounts which are opened legally can later be used for "nefarious purposes".
He states: "Fraudsters use stolen or synthetic identities to open bank accounts, or syndicates employ the services of mules who are properly authenticated and verified, and these can delay the detection and closing down of fraudulent accounts."
He promises that FNB will assist the police.
This is not good enough and we're not holding our breath for the police or FNB to recover the money.
FNB appears unwilling or not capable of tracing who the bank account belongs to, where the money went, nor with assisting with the recovery of the money. This increases our scepticism about FICA's usefulness. It is one of those laws that honest people grudgingly adhere to and crooks easily circumvent.
R600,000 wouldn't even tickle FNB. But it may keep The Big Issue in business. If FNB can't help reverse these fraudulent transactions, it should at least donate the lost money to The Big Issue.
