The Department of Finance has announced the commencement of South Africa’s new General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act.
The department gazetted the commencement on Friday, 29 December 2022.
It noted that the commencement of the laws would be split into two parts:
- 29 December 2022: Sections 9, 10, 16, 18 to 55, 59, and 62 to 65;
- 1 April 2023: Sections 1, 3, 4, 5, 8, 11 to 15, 17, 56, 57, 58, 60 and 61;
- Sections 2 and 6 also come into effect from 1 April, with the exception of some subsections.
The Anti-Money Laundering and Combating Terrorism Financing Amendment Act is an omnibus act aimed at amending various pieces of legislation to address deficiencies related to combatting money laundering and terrorism financing and bring South Africa into compliance with the global standards set by the Financial Action Task Force (FATF).
It is South Africa’s main response to the threat of greylisting by the FATF and was fast-tracked through parliament in a bid to avoid that outcome. The act was signed into law by the president on 22 December 2022.
The Act amends five pieces of legislation to satisfy the technical compliance deficiencies that were identified by the FATF. These technical compliance deficiencies represent one-half of the ‘exam’ South Africa must pass.
South Africa is a member of FATF, which in 2019, conducted a peer review and produced a Mutual Evaluation Report on the country’s implementation of FATF’s 40 recommendations against money laundering and terrorism financing. South Africa was rated poorly in the report as it was found to have not complied with 20 of the 40 FATF standards.
The bill amends five pieces of legislation:
- The Companies Act;
- Financial Intelligence Centre Act (FICA);
- Financial Sector Regulation Act (FSRA);
- Non-Profit Organisations Act; and
- Trust Property Control Act.
It amends four of the abovementioned Acts (not the NPO Act) to include a definition of “beneficial owner”.
The act gives the executive arm of government unfettered powers to make regulations on access to information that is mainly private, particularly in respect of trusts. One of the main aims of the act is to provide for the disclosure of the beneficial owners and the ultimate controllers of trusts, companies and non-profit organisations (NPOs).
Finance minister Enoch Godongwana said the laws address deficiencies in at least 14 of the 20 recommendations, including an appropriate enhancement of powers and procedures for regulatory authorities.
South Africa had until October 2022 to take the necessary remedial steps to avoid a greylisting by the FATF, which would make it more difficult for countries to conduct business with South Africa and subject local companies to added checks and balances.
National Treasury has expressed confidence that the greylisting could be avoided through the new laws. It also said that having a financial system that was able to adequately address risks of money laundering and terrorist financing was in the public interest.
However, due to the sweeping changes being made and the complexities of the laws being dealt with, some legal experts and analysts have cast doubt on whether the new laws do enough – without creating more loopholes or added complexity – to truly dodge the grey list.
The FATF will decide in February 2023 whether or not South Africa has done enough to avoid the list.
The full act can be read below:
The gazetted commencement dates are embedded below: