National Treasury has released a media statement that President Cyril Ramaphosa recently signed into law two key Acts of Parliament namely:
- Protection of Constitutional Democracy Against Terrorism and Related Activities Amendment Act, 23 of 2022 (“POCDATARA Amendment Act”); and
- General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act, 22 of 2022 (“General Laws Amendment Act”)
The enactment of these two key Acts of Parliament is designed to strengthen South Africa’s system of anti- money laundering and combating the financing of terrorism (AML/CFT). These laws will strengthen the fight against corruption, fraud and terrorism, and also assist South Africa in meeting the international standards on AML/CFT, and to reduce the prospect of grey listing by the Financial Action Task Force (FATF).
POCDATARA
The POCDATARA Amendment Act amends the Protection of Constitutional Democracy Against Terrorism and Related Activities Act, 2004 by strengthening its provisions and expanding it to include aspects such as cyber-terrorism.
These amendments also address two key findings of the FATF’s mutual evaluation from 2021, by refining the offence of terrorist financing and improving the processes for the implementation of financial sanctions against supporters of terrorist organisations.
The POCDATARA Amendment Act took effect on 4 January 2023.
General Laws Amendment Act
The General Laws Amendment Act amends five different Acts, namely:
i. Financial Intelligence Centre Act, 2001
ii. Trust Property Control Act, 1988
iii. Companies Act, 2008
iv. Non-profit Organisations Act, 1997
v. Financial Sector Regulation Act, 2017
The amendments take effect on different dates. The commencement dates for each section of the General Laws Amendment Act are set out in Proclamation Notice 109 of 2022, which was published on 31 December 2022.
Financial Intelligence Centre Act (FICA)
The changes improve the provisions that require financial and other institutions to perform due diligence in respect of their customers. This ensures that these institutions have more reliable information about their customers and are in a better position to manage money laundering and terrorist financing risks in their businesses, which addresses another key finding of the mutual evaluation.
Some of the amendments relate to:
- The definitions of ‘beneficial owner’, ‘domestic prominent influential person’ and ‘foreign prominent public official’, and inserting a definition for ‘prominent influential person’.
- The objectives of the Financial Intelligence Centre (‘Centre’)
- The functions of the Centre to include the provision of forensic information
- General powers of the Centre
- Customer due diligence – providing for additional and ongoing due diligence measures, and by amending the process followed when there are doubts about the veracity of information.
- Provisions relating to resolutions of the Security Council of the United Nations
- Disclosure of information to the Centre and access to information by the Centre.
- Empowering the Minister 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, 2013.
- Expanding the requirements for the risk management and compliance programme (RMCP) – by including proliferation financing activities, alignment with updated customer due diligence provisions, requirements relating to branches of the accountable institution including branches in foreign countries.
- Offences and administrative sanctions
- Schedule 2 – list of supervisory bodies where the Estate Agency Affairs Board and a provincial licensing authority as defined in section 1 the National Gambling Act, have been removed.
- Schedules 3A and 3B – to align with the amended definitions for Domestic Politically Exposed Person, and Foreign Politically Exposed Person
- Adding Schedule 3C – this is a new schedule that lists Prominent Influential Persons.
The amendments to FICA took effect on 31 December 2022.
Trust Property Control Act, and the Companies Act
The amendments to these Acts lay the basis for South Africa to develop a comprehensive mechanism to bring transparency to the beneficial ownership of corporate vehicles such as trusts and companies. This is a significant step in strengthening the ability of investigators and other authorities to pierce the corporate veil and determine who are the natural persons that deal with financial and other institutions at arm’s length through trusts and companies. These measures will boost the ability of the authorities to fight against crime and corruption perpetrated by criminal syndicates.
Most of these amendments will take effect on 1 April 2023.
Non-profit Organisations Act
This Act was amended to establish a regulatory framework to protect non-profit organisations which transfer funds overseas from possible exploitation by facilitators and financiers of terrorist organisations. This ensures that non-profit organisations that transfer funds overseas abide by standards of good governance and financial management and are supervised according to the requirements of the Non-profit Organisations Act.
These amendments will take effect on 1 April 2023.
Financial Sector Regulation Act (FSRA)
The FSRA was amended to improve the ability of financial sector regulators to scrutinise the beneficial owners of licensed financial institutions. The amendments include the insertion of a new Chapter to the FSRA on beneficial owners which provides a definition of ‘beneficial owner’ and empowers standards and regulator’s directives to be made in relation to beneficial owners.
These amendments took effect on 31 December 2022.