Minister of Finance Enoch Godongwana has published an explanatory summary of a bill that will amend five Acts of Parliament as the government moves to beef up the country’s anti-money laundering and counter terrorism financing legislation to ward off a potential grey-listing by the Financial Action Task Force (FATF) next year.
The summary to the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill was published in the Government Gazette on Thursday.
It said the minister intends to introduce the bill to the National Assembly in the third quarter of this year. A copy of the bill will be published by National Treasury once it has been introduced.
The bill will amend the Companies Act, Financial Intelligence Centre Act, Financial Sector Regulation Act, Non-profit Organisations Act, and Trust Property Control Act.
National Treasury acting director-general Ismail Momoniat told Business Day that the bill will go a long way towards meeting the requirements set out in the FATF’s October 2021 evaluation report.
The report highlighted a number of deficiencies in South Africa’s legislative regime — particularly the absence of legislation for identifying the beneficial ownership and ultimate controllers of companies, trusts and non-profit organisations.
The bill addresses 14 of the 20 deficiencies identified by the FATF.
“The bill will address most of the deficiencies in the legal framework to counter money laundering and terrorism financing,” Business Day quoted Momoniat as saying.
“The bill will bring South Africa up to FATF and international standards and will go a huge way forward towards us addressing the deficiencies identified by FATF, but we will still have to do more than that,” Momoniat said.
However, the legal framework was only one of the things that has to be addressed, because South Africa was also assessed on how effective it was in implementing its anti-money laundering and counter terrorism financing laws.
Momoniat said this was where South Africa would face a bigger challenge.
Another bill, the Protection of Constitutional Democracy against Terrorist and Related Activities Amendment Bill, is expected to be enacted by November. It will address two deficiencies, with the remaining four to be dealt with by regulations.
What the omnibus bill contains
The omnibus bill proposes to amend the five Acts as follows:
Financial Sector Regulation Act
- Provide that a financial institution, key person, representative or contractor to which a regulator’s directive in terms of Part 2 of Chapter 10 has been issued must comply with the directive; and
- Insert a new chapter dealing with beneficial owners, which provides a definition of “beneficial owner”, and empowers standards and regulator’s directives to be made in relation to beneficial owners.
Financial Intelligence Centre Act
- Amend the definitions of “beneficial owner”, “domestic prominent influential person” and “foreign prominent public official”, and insert a definition of “prominent influential person”;
- Amend the objectives of the Financial Intelligence Centre (FIC);
- Amend the functions of the FIC to include the provision of forensic information, by empowering the Centre to request information held by other organs of state;
- Provide for additional and ongoing due diligence measures, and amend the process followed when there are doubts about the veracity of information;
- Align certain provisions and Schedules 3A and 3B to refer appropriately to domestic and foreign “politically exposed persons”, as distinct from “politically influential persons”, who will dealt with in a new Schedule 3C;
- Amend certain provisions relating to resolutions of the United Nations Security Council, by amending the powers of access by authorised representatives to records of accountable institutions;
- Enable the FIC to renew a direction not to proceed with a transaction, by providing for the safeguarding of information;
- Amend the provisions relating to the disclosure of information to the FIC and access to information by the Centre;
- Empower the Minister of Finance to prescribe appropriate requirements relating to the access to personal information, to ensure that adequate safeguards are in place, as required by section 6(1)(c) of the Protection of Personal Information Act;
- Amend certain provisions relating to the risk management and compliance programme, by amending the offences provisions to empower the imposition of administrative sanctions;
- Amend the provision relating to the amendment by the Minister of Schedule 2; and
- Amend Schedules 2, 3A and 3B, and insert a new Schedule 3C.
Companies Act
- Insert a definition of “beneficial owner”; by providing for a comprehensive mechanism through which the Companies and Intellectual Properties Commission can keep accurate and updated beneficial ownership information;
- Require a company to keep a record of a natural person who owns or controls the company in terms of the definition of “beneficial owner”, and provide for specified timelines within which the company must record any changes in this information;
- Require a company to file a record of any natural person who owns or controls the company in terms of the definition of “beneficial owner”, with the Commission; and
- Specify that persons who are convicted of offences relating to money laundering, terrorist financing, or proliferation financing activities are prohibited from registering as company directors.
Trust Property Control Act
- Insert definitions of “accountable institution” and “beneficial owner”;
- Impose certain requirements on trustees;
- Specify matters that would disqualify a person from being appointed or continuing to act as a trustee;
- Provide for the removal of a trustee who becomes disqualified to continue to act as a trustee;
- Specify information that must be kept by trustees in relation to beneficial owners in relation to trusts;
- Require the Master of the High Court to maintain a register containing information relating to the beneficial ownership of trusts, and provide for access to information regarding beneficial ownership; and
- Specify certain offences.
Non-profit Organisations Act
- Require registration in terms of the Act;
- Enable the Non-profit Organisations Directorate, in order to perform its functions, to collaborate, co-operate, co-ordinate and enter into arrangements with other organs of state;
- Require non-profit organisations to submit prescribed information about the office-bearers, control structure, governance, management, administration, and operations of non-profit organisations to the director;
- Require prescribed information relating to the office-bearers, control structure, governance, management, administration, and operations of non-profit organisations to be included in the register that the director must keep, and provide for access to that information;
- Provide for grounds for disqualification for a person to be appointed or continuing to act as an office-bearer of a non-profit organisation;
- Provide for the removal of an office-bearer; and
- Specify certain offices.
