Cabinet has approved a bill which National Treasury director-general Ismail Momoniat says will go a long way in meeting the requirements for SA as laid down in an October 2021 report by the Financial Action Task Force (FATF).
The FATF is an international body which sets standards for the combating of money laundering and terrorism financing.
The FATF report highlighted a number of deficiencies in SA’s legislative regime — particularly the absence of legislation for identifying the beneficial ownership and ultimate controllers of companies, trusts and non-profit organisations – which the bill aims to address.
The deficiencies identified by FATF raise the risk that SA will be greylisted by FATF when it meets in February. Grey-listing would have dire consequences for the economy and in particular the financial sector.
The General Laws (Anti Money Laundering and Combating Terrorism Financing Amendment) Amendment Bill, which will be submitted to parliament for processing, is an omnibus bill that amends the Financial Intelligence Centre Act, the Non-Profit Organisation Act, Trust Property Control Act, the Companies Act and the Financial Sector Regulations Act.
Momoniat said the bill was a necessary but not a sufficient condition for SA warding off a grey listing by FATF.
“The bill will address most of the deficiencies in the legal framework to counter money laundering and terrorism financing,” Momoniat said. The bill addresses 14 of the 20 deficiencies identified by FATF. Another bill — the Protection of Constitutional Democracy against Terrorist and Related Activities Amendment Bill — administered by police minister Bheki Cele, is expected to be enacted by November 2022. It will address two deficiencies with the remaining four to be dealt with by regulations.
“The bill will bring SA 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.
The legal framework was just one of the things that had to be addressed, he said, as SA was also assessed on how effective it was in implementing its anti-money laundering and counter terrorism financing laws. These issues related for instance to the country having a national risk assessment plan and how effective the authorities are in investigating and prosecuting the crimes and whether there is asset forfeiture.
Momoniat said this was where SA would have the harder challenge.
He was very hopeful that the bill would be passed by parliament by the end of the year, saying it would hold SA in good stead with FATF.
Parliament’s finance committee is also currently dealing with amendments to schedules of the Financial Intelligence Centre Act which would broaden the scope of accountable institutions to include credit providers, dealers in goods valued at more than R100,000, cryptoassets, krugerrands, and motor vehicles.
Retailers, estate agents, gambling institutions, trust and company service providers, and legal practitioners would also be brought within the scope of the act, as well as providers of certain non-life insurance policies. These amendments also address FATF requirements.
A cabinet statement released on Friday said the amendments “respond to the deficiencies identified during the peer review of the country conducted by the Financial Action Task Force.” The mutual evaluation report made 40 recommendations that would assist in getting SA to be aligned with international measures of combating money laundering and financing of terrorism.
“SA was found to be lacking in 20 areas. The bill addresses about 14 of the areas identified.”
SA was rated poorly in 20 of FATF’s 40 recommendations.
ensorl@businesslive.co.za
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