In October 2021, the Financial Action Task Force (FATF) published its evaluation of South Africa’s anti-money laundering measures and identified some shortcomings. These are such that we risk being greylisted by the FATF when it meets in February 2023. Greylisting, in turn, would raise our international risk profile, place a question mark over our financial regulatory bodies and increase the risk premium to corresponding relationships between SA banks and international financial institutions. At worst, corresponding banking relationships could be cancelled.
Therefore Cabinet approved a Bill last week which the National Treasury believes will address 14 of the 20 deficiencies highlighted in the FATF report. The General Laws (Anti Money Laundering & Combating Terrorism Financing) Amendment Bill 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. The Bill will be published immediately after being tabled in Parliament, probably in the next two weeks.
Another Bill, the Protection of Constitutional Democracy against Terrorist & Related Activities Amendment Bill, is expected to be enacted by November. This will address a further 2 deficiencies, the remaining four to be dealt with by regulations.
What will the amendments look like?
The Bills will improve mechanisms to collect beneficial ownership information about companies and trusts. The FATF report noted that ‘insufficient beneficial ownership transparency is an acute vulnerability as companies and trusts are often misused for money laundering or to carry out predicate crimes, making attorneys and trust and company service providers inherently vulnerable to misuse’. The amendments will also give the Financial Intelligence Centre new powers, including access to records of a range of institutions. A key focus is to improve information gathering to better establish beneficial ownership.
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