If you are asked for FICA documents when you give an estate agent a mandate, it is legal to decline. However, you are legally required to provide FICA documents when the sale is concluded – arguably this would be when you have an offer you’re going to accept.
In fact, this applies to any ‘single transaction’ contemplated in the Act.
DISCLAIMER: I am neither lawyer nor estate agent.
We’re in the process of selling our house. We spoke to an estate agent, and gave him a mandate. He then asked for our FICA documentation – ID documents and proof of address (He’s selling the house that we’re currently living in, but nevermind…)
My understanding is that FICA documents are required to prevent money laundering, so I couldn’t see how it was necessary to provide them in order for the estate agent to execute our mandate. No money has or will changed hands at this stage in the process.
It irks me that these days one has to hand out one’s ID document to all and sundry, progressively reducing the identifying value of said ID document as it becomes progressively more exposed to identity theft. So I went digging and found out the following:
Identification of clients and other persons (1) An accountable institution may not establish a business relationship or conclude a single transaction with a client unless the accountable institution has taken the prescribed steps-
(a) to establish and verify the identity of the client;
[etc, relevant only to proxies] [my emphasis]
The accountable institution in question is the estate agent, and ‘business relationship’ is clearly defined by the Act:
‘business relationship’ means an arrangement between a client and an accountable institution for the purpose of concluding transactions on a regular basis;
By that definition, there is no business relationship between a seller or buyer on the one hand and an estate agent on the other, because there will not be “transactions on a regular basis”, so the ‘single transaction’ clause must then apply. Therefore you are only required to hand over your FICA documentation on concluding the transaction.
However the Estate Agency Affairs Board specimen regulations document says that Estate Agents are required to collect FICA documentation before executing a mandate. This is incorrect.
The specimen regulations seem to be based on FIC guidance PCC 10 which says
- Part 1 of Chapter 3 the FIC Act – The duty to identify clients
2.1 Part 1 of Chapter 3 of the FIC Act, and specifically section 21 of the FIC Act deals with the identification of clients and other persons. Section 21 prohibits accountable institutions from establishing business relationships or entering into single transactions with their clients unless they have established and verified the identities of their clients, or established and verified the identities of persons representing their clients. [my emphasis]
This is incorrect. Section 21 of the FIC Act does not require FICA documentation on “entering into a single transaction” (my emphasis), it requires FICA documentation on concluding a single transaction.
And in fact if you look at the rest of PCC 10, you’ll see there are repeated references to concluding a single transaction, and the fact that FICA documents are required only at that point.
As I said, I’m not a lawyer, so I’m open to correction on this. But it seems clear that there is an error in PCC 10 which has been propagated by the Estate Agency Affairs Board, unnecessarily placing a fairly onerous record-keeping burden on estate agents and annoying buyers and sellers.
And I find it astonishing that this “entering into a single transaction” error is now in documents downloadable from banks and other large financial institutions – even though they would be covered by the ‘business relationship’ clause. Somebody please tell me I’m wrong…