A recent International Monetary Fund study has shown that of the estimated $3.5-trillion of money laundered worldwide each year, $5 billion to $8bn is probably channelled through South Africa.

In terms of the Financial Intelligence Centre Act (Fica), which came into operation last February, South Africans working in professions which could be money laundering targets are now obliged to follow the procedures set out in the act, or face fines of up to R15 million or 15 years in jail.

Those affected by the law include estate agents, financial institutions, stock market traders and casinos. To comply with Fica, estate agents must establish and verify each client's identity, keep records of all sales transactions, and report any suspicious or unusual deals, says Saul Geffen, MD of MortgageSA.

"A comprehensive form must be filled in to verify each client's identity, recording the full names, date of birth, identity number and residential address, among other details," he says.

"A copy of the person's identity document or passport, and correspondence such as bank statement or electricity bill that shows a street address must also be attached to the form."

Geffen says it is important for estate agencies to put efficient procedures in place to ensure that gathering the required information will not delay the sale. "It's best to obtain as much of this documentation as possible at the mandate stage," he advises.

Estate agents are also required to keep records of the manner in which the client's identity was established, the name of the person who gathered the information, the nature of the transaction handled, the parties involved in the transaction, and the financial accounts at the conclusion of the sale.

All these records must be stored for five years, either in electronic format or on paper, and must be easily retrievable.

If stored at an external storage facility, the agency must provide the details of that facility.

In addition, agents are obliged to automatically report all cash transactions, or cash and electronic transfers to and from South Africa that are above a prescribed limit.

The regulations relating to such reports have not yet been published, says Geffen. It is incumbent on agents to report any suspicious or unusual property transaction.

"This is not always as obvious as someone attempting to pay for a house with a suitcase full of money. Some objectivity will obviously be required, but agents are duty-bound to report any deals that they suspect are not above board."

Geffen provides some examples of suspicious transactions:

• The purchase price is paid into a foreign bank account. This could imply an exchange control violation and tax evasion by the seller.
• A property was over-valued as at October 1, 2003, for the purpose of avoiding capital gains tax.
• A large amount of money is deposited into an estate agency's trust account on the pretext of future investment, and withdrawn soon afterwards because of a "change of heart".
• The purchase price is paid by an unidentified third party.
• The purchaser insists that the property be registered in the name of an unrelated third party.

"This list is not exhaustive," he says.

"Agents must assess every deal they conclude - but they also need to bear in mind that not every unusual deal is a suspicious one." He adds that agents are obliged to report any suspicious transaction within 15 working days of when they first suspect something is wrong. "The report can also be made after a sale is concluded, if new facts come to light about a transaction that was at first perceived to be legitimate."

The law forbids any agent who reports a suspicious transaction from discussing their report with anyone, even their manager. However, the submission of such a report will not affect the property sale.

The agent can continue with the transaction, as the information gathered will be used to build up a profile of the suspected money launderer. In fact, it could be years before any action is taken, he explains.

Geffen points out that leasing agreements have different requirements. But whether selling or leasing, agencies are required to draw up internal rules covering all aspects of compliance with Fica.

Each agent must receive training to ensure that he meets all the requirements of the act, and a Fica compliance officer must be appointed at each agency.

The Estate Agents Advisory Board has drawn up best practice guidelines to help agencies through the transitional period.