The National Treasury is proposing a raft of amendments to laws with a view to SA ending its greylisting imposed in February 2023 by the Financial Action Task Force (FATF).
SA has made progress in meeting some of the requirements of FATF, a global body that sets standards for combating money laundering and the financing of terrorist regimes, but still has to demonstrate improvement in law enforcement and prosecution.
In a bid to address some of the remaining weaknesses the Treasury has gazetted the draft General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill for public comment. It said in a statement that the proposals were meant to address deficiencies identified by FATF’s mutual evaluation in 2021 and during the remedial process to exit the FATF greylist, and to prepare SA for the next mutual evaluation to be conducted in 2026/27.
Amendments have been proposed to the Companies Act, the Financial Intelligence Centre (FIC) Act, Financial Sector Regulation Act and the Nonprofit Organisations Act, in the latter case to set penalties under the act of fines of up to R1m or imprisonment of up to five years or both.
One proposal is to toughen the sanctions under the Companies Act for failure to submit a register of beneficial ownership, one of SA’s weaknesses identified by FATF which was partially addressed in the previous General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act. Failure to comply will be subject to an administrative fine.
The Companies and Intellectual Property Commission (CIPC) will be empowered to impose an administrative fine or deregister a company (or close corporation) for the failure to submit a securities register or beneficial interest register annually.
The proposals provide for fines such as the greater of 10% of a company’s turnover for the period of noncompliance with a CIPC notice or up to R10m prescribed by the minister of trade, industry and competition.
It is proposed that any person fined administratively may apply to the Companies Tribunal for a review of the fine.
An amendment to the Financial Sector Regulation Act is proposed to empower financial sector regulators to obtain information from significant owners or beneficial owners.
Other amendments are intended to close gaps in the protection of financial sector customers, and licensing and regulations for market conduct, against money laundering and to strengthen licensing and enforcement powers.
Proposed amendments to the FIC act heighten the compliance obligations of accountable institutions with respect to clients identified by a notice by the FIC director regarding entities identified in a resolution of the UN Security Council. This relates in particular with regard to property owned or controlled by such clients of the accountable institutions.
Accountable institutions will also be required to exercise heightened vigilance over new delivery mechanisms and the use of new or developing technology which may involve or facilitate money laundering activities, the financing of terrorist and related activities or proliferation financing activities.
The deadline for public comment on the proposed amendments is close of business on February 6 2025.
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