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Reflections on Current <strong>Compliance</strong>-Vetting Procedures at a Major South African Law Firm Ingo Porada, MMVIII cases to vindicate such an assumption. Furthermore, the possible benefit of client goodwill that can only sometimes be derived from the 'personal relationship,' and as such capitalised on for moving smoothly through the FICA procedures, is in almost all cases far outweighed by an erosion of the firm-internal goodwill that is needed to make cooperation between the support staff who are involved in the implementation of the 'Know Your Customer' policy as productive and mutually accommodating as it should be. Often, also, to speculate on client goodwill, as derived from a 'personal relationship,' for cooperation in a bureaucratic procedure, can take the edge off substantive priorities in the client's actual transaction with the firm or / and disturb a delicate rapport which in many cases has previously had to be built over time with much patience and diplomatic skills. Conversely, however, there may be many transactions which are in themselves so formal, procedure-oriented and prosaic that the very dimension of 'client goodwill' hardly has a place in them at all. For these reasons, client goodwill is too uncertain a variable to be counted upon to facilitate FICA procedures. Moreover, there is an assumption, which is not borne out by experience in practice, that – as for implementation of the FICA procedures – the 'personal relationship' between attorney and client exists derivatively also between the client's colleagues and the attorney's support staff who are administratively involved in the substantive transaction. And finally, there is an implied premise, which is possibly not valid, that there can not be a 'personal relationship' between the FICA Administrator and the client or / and the client's administrative colleagues, from which goodwill might be generated for efficient cooperation in the FICA procedures. As a matter of fact, the quality of 'personal relationships' between a client's administrative colleagues and the advising attorney's support staff may in many cases be more dependable and easy to nurture, as well as less fraught by possible complications in the substantive transaction, than the quality of the 'personal relationship' between the client and the advising attorney. * * * * * For all these various reasons, some significant changes in the firm's modus operandi with regard to ensuring clients' FICA compliance should be considered. In particular, the supposedly 'ideal' – because simultaneous and contextual - procedure of clients' FICA credentials being gathered at the time of the first consultation, which is rarely followed in any event, might actually in itself be relatively too bureaucratic, intrusive, vexatious, and cumbersome, et c., in comparison to a probably still more simultaneous and contextual, and thus probably more efficient and painless procedure that might instead be implemented. One concept of an alternative approach to operating 'Know Your Customer' procedures is the FICA Vault concept, which potentially turns the FICA procedures into a revenue-generating operation. Among the drawbacks of the FICA Vault concept, however, are – firstly - that it attains a meaningful level of iv
Reflections on Current <strong>Compliance</strong>-Vetting Procedures at a Major South African Law Firm Ingo Porada, MMVIII efficacy only when a sufficient number of subscribers participate in the scheme, and secondly, that its almost exclusive reliance on digitalised / electronic data, after the moment of initial compliance-vetting of a party, tempers, and possibly trivialises, as well as perhaps ultimately dilutes, the fundamental objective of the 'Know Your Customer' principle which is central to the notion of compliance as such. However, a positive concept that is at work in the FICA Vault concept is that, by its manner of working, it places the onus of 'being compliant' more squarely, and at the same time more painlessly, on the parties – individuals as well as juristic persons – who are at the receiving end of compliance-vetting. This concept gives compliance-vetting a self-service dimension, because it inherently spares administrators, as well as the parties whose compliance has to be ensured, the chores and irritation which are now an almost inevitable feature of every instance of compliance-vetting. This possible 'self service' aspect of compliance-vetting should be developed. Possible routes to this end are, for example, an online FICA checklist with some interview, risk assessment and second-level processing features, for - possibly incentivised - completion by a client prior to the first consultation, and with scope for automated integration with the client database. Such a manner of operating would not only impersonalise compliance-vetting and thus limit the uncertainties of goodwill, but it would also free support staff resources for other work that should be logistically integrated with the operation of the 'Know Your Customer' policy, such as database maintenance and housekeeping, but is now done separately, and somewhat un-systematically as well. Furthermore the records which establish a client's FICA credentials should preferably be kept in the advising attorney's transaction files, as only at that end the necessary information is to hand as to whether a client's records need to be complemented or updated in the light of current activities in the substantive transaction. Thus, after evaluation in the firm's FICA office, the client's identity, address, and company registration records should be passed back to the advising attorney, possibly after being scanned into an electronic file, as happens in other accountable institutions, and only the client's record form should be kept in the FICA file. Such a change in the filing procedures and logistics would also reduce the firm's risk from consequences of official inspections of its clients' FICA records, as in such exercises only spot-checks are made; and such official spot checks might be more easily moderated by the firm's staff if the FICA records are kept by each advising attorney. Lastly, the evaluation of complicated sets of clients' FICA records, where compliance is not immediately apparent, should be done by a specially trained and knowledgeable FICA expert in terms of the afore-mentioned exemptions and provisos for discretion, et c., and taking into consideration also specific 'risk profiles' of the transaction with the given client. Refinements and standards in this particular step in the suggested sequence of compliance-vetting can be developed in the course of actual practice. v
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Compliance

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