To clamp down on organised crime, the Companies and Intellectual Property Commission (CIPC) is one step closer to establishing a register that will reveal the names of beneficial owners of companies.
Tracking beneficial ownership is among 12 priority actions the Financial Action Task Force (FATF) — the global money laundering and terrorism financing watchdog — identified for South Africa to work on if it is to be removed from the FATF greylist.
A CIPC report on monitoring beneficial ownership and the amendments to the Companies Act required to enable this will go to parliament this month, the minister of trade, industry & competition, Ebrahim Patel, told MPs.
“In line with the commitments made to FATF and the commitment as South Africa to exit early from increased monitoring, we want to keep the period of greylisting as short as possible,” he said.
“The CIPC is now implementing different phases of a beneficial ownership register and the data on the beneficial ownership register is for all entity types where ownership of a person is 5% or more.”
Patel said companies are obliged to collect this information, while the CIPC will have to maintain a register for law-enforcement agencies to retrieve when pursuing cases of money laundering, terror financing and proliferation.
“The CIPC is now empowered to collect beneficial ownership information from legal persons and companies are required to present this information to the CIPC. The regulations will strengthen the fight against corruption and improve the integrity of South Africa’s financial system.”
Patel said amendments to the Companies Act were being processed by the cabinet for tabling this month.
Webber Wentzel consultant Lerato Lamola-Oguntoye told Business Times: “Law enforcement should be able to access such [beneficial ownership] information in an efficient manner. The mischief [it aims to address] is the misuse of legal persons and legal arrangements for money laundering or terrorist financing. South Africa is taking proactive steps to address this priority action.”
Until now there had been no requirement to establish and maintain a record of persons who ultimately owned or exercised control over companies, said Lamola-Oguntoye.
“Our legislation is saying all the right things to meet the FATF recommendations, though there is debate on whether the way in which the recommendations were drafted into our legal framework will work from a South African law perspective.”
She said for the FATF to be satisfied that its 40 recommendations are being addressed, the public and private sectors, law enforcement and accountable institutions all have a role to play in implementation.
The National Treasury has indicated that the government has set itself a soft target of January 2025 for South Africa to be removed from the greylist.
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