FICA compliance requirements differ based on jurisdiction, notably between South Africa’s Financial Intelligence Centre Act (FICA) and the U.S. Federal Insurance Contributions Act (FICA). This article covers both South African FICA compliance (regarding anti-money laundering and financial crime) and U.S. FICA compliance (regarding payroll tax obligations).
South Africa: FICA Compliance Requirements
- Registration: Accountable institutions must register with the Financial Intelligence Centre (FIC) within 90 days of commencing operations[1][5].
- Appointment of a Compliance Officer: Organizations must appoint a competent and senior compliance officer responsible for implementing FICA obligations[1][5].
- Risk Management and Compliance Programme (RMCP): Develop a documented RMCP identifying risk exposure, outlining due diligence processes, and setting internal controls for record-keeping and reporting. This must be reviewed regularly[1][5].
- Client Due Diligence (CDD): Institutions must verify the identity of clients, understand the risk posed by their activities, and maintain related documentation[1][5].
- Reporting Obligations: Report certain transactions to the FIC, including:
- Cash Threshold Reports (CTRs) for transactions above R49,999.99
- Suspicious Activity Reports (SARs) for unusual or high-risk transactions
- Terrorist Property Reports (TPRs) if assets are linked to terrorism[1]
- Record-Keeping: Retain records securely for at least 5 years after the end of the business relationship, transaction, FIC report, or investigation[1].
- Ongoing Training: All relevant staff must receive regular, up-to-date training on FICA and the institution’s RMCP[1].
- Enforcement: Increased regulatory resources in 2025 mean stricter audits and heavier penalties for non-compliance, with greater engagement from the Financial Intelligence Centre, Reserve Bank, and SARS[3].
U.S.: FICA Tax Compliance Requirements
- Withholding and Matching: Employers must withhold 6.2% of an employee’s wages for Social Security and 1.45% for Medicare; employers must match these rates for a total 15.3% contribution[2][4][6][7].
- Wage Base Limit: For 2025, Social Security tax only applies to the first $176,100 in earnings; Medicare tax has no limit but an extra 0.9% is withheld from employees earning over $200,000 (single filers), $250,000 (joint filers), or $125,000 (married filing separately). Employers do not match the additional Medicare tax[2][4][6][7][8].
- Reporting: Employers must accurately report withheld FICA taxes and remit them to the IRS on a regular schedule[2][6].
- Accuracy: Failure to withhold, report, or remit FICA taxes can lead to IRS penalties and interest[2][4].
References
- [1] FICA compliance South Africa 2025 – Kern Attorneys
- [2] FICA Tax: Rates, How It Works in 2025 – NerdWallet
- [3] Budget 2025 – What it means for FICA Compliance and Accountable Institutions – Cover Magazine
- [4] What Is FICA Tax? 2025 Rates and How It’s Calculated – Paycom
- [5] The Key Requirements That Need to be Met in Order to be FICA Compliant – nCino Blog
- [6] FICA tax: How it works and current rates – H&R Block
- [7] FICA Tax Rates 2025: Withholding Percentages – IRIS Global
- [8] Social Security and Medicare Withholding Rates – IRS.gov
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