Financial Intelligence Centre Amendment Bill [B33-2015]

The Standing Committee on Finance invites you to submit a written submissions on the Financial Intelligence Centre Amendment Bill

The Financial Intelligence Centre Amendment Bill aims to:

• amend the Financial Intelligence Centre Act, 2001, so as to define or further define certain expressions;
• extend the objectives of the Centre so as to provide for the Centre to assist in the implementation of financial sanctions
• and to administer measures pursuant to resolutions adopted by the security Council of the United Nations;
• extend the functions of the Centre so as to provide guidance to accountable institutions in respect of the freezing of property and transactions pursuant to resolutions adopted by the Security Council of the United Nations;
• delete provisions relating to the Counter Money Laundering Advisory Council;
• provide for a risk based approach to client identification and verification;
• provide for the strengthening of customer due diligence measures including making provision for the customer due diligence measures in respect of beneficial ownership and prominent persons;
• provide for the obligation to keep identity and verification records as well as transaction records;
• set out the procedure in respect of financial sanction control measures pursuant to the notification of persons and entities identified by the Security Council of the United Nations;
• provide for Risk Management and Compliance Programs, governance and training relating to anti-money laundering and counter terrorist financing;
• provide for a warrant to conduct inspections;
• provide for a financial penalty to be paid into the National Revenue Fund;
• provide for further procedural issues in respect of appeals;
• make further provision for offences;

Public hearings will be conducted at Parliament on Wednesday, 11 November 2015.

Please note submissions and requests to make oral presentation must be received by no later than 12:00 on Monday, 09 November 2015

Comments can be emailed to Mr Allen Wicomb at [email protected] by no later than 12:00 on Monday, 09 November 2015.

Enquiries can be directed to Mr Allen Wicomb on tel (021) 403-3759

Issued by Hon. YI Carrim, MP, Chairperson: Standing Committee on Finance (National Assembly).

Background
South Africa has a long-standing commitment to combating moneylaundering and the financing of terrorism, having ratified the United Nations Convention Against Corruption (‘‘UNCAC’’) in 2004, and joining the multi-lateral Financial Action Task Force (‘‘FATF’’) in 2003. As a result, South Africa enacted the Financial Intelligence Centre Act, 2001 (Act No. 38 of 2001) (‘‘FIC Act’’), and other related Acts to assist in combating financial crimes. The FATF is an inter-governmental body which sets standards and develops and promotes policies to combat money laundering, the financing of terrorism, and the proliferation of weapons of mass destruction. These standards are used as benchmarks in formal peer review and evaluation processes to test the robustness of a country’s measures against these illicit activities, and the integrity of its financial systems. The improvements to the legislation seek to enable accountable institutions to make it simpler for customers to satisfy customer due diligence processes. It is intended that the improvements will assist institutions to strengthen their internal compliance regimes and concentrate their resources more effectively on addressing risks that their products and services may be abused for illicit purposes. In addition, the improvements seek to create opportunities for financial institutions to explore more innovative ways of offering financial services to a broader range of customers, and bring previously excluded sectors of society into the formal economy. This will improve the efficacy of measures to combat terrorism financing and money laundering, while also promoting financial inclusion. In order to address the deficiencies in the FIC Act, it is necessary to amend the customer due diligence provisions of the Act, by requiring accountable institutions to have appropriate risk-management systems in place that focus their efforts on those cases where there is a higher probability that their products and services will be abused by criminals. This will enable them to take proactive steps to determine the risks of abuse associated with various customer relationships. On the basis of an understanding of the risks, an institution can apply measures to mitigate those risks, by gathering information on the customer’s source of wealth, and monitoring the customer’s transaction behaviour to spot transactions that seem anomalous given the recognised customer profile. In situations where transactions differ significantly from the profile, these will need to be reported to the authorities such as the Financial Intelligence Centre (‘‘the FIC’’).