Financial Intelligence Centre Amendment Bill [B33-2015]: adoption; Committee Report on Treasury Budget; Oakbay Investments

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Finance Standing Committee

26 April 2016
Chairperson: Mr Y Carrim (ANC)
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Meeting Summary

The Committee approved the Financial Intelligence Centre Amendment Bill after an amendment change to section 40 changing "may" to "must" although subject to conditions. It also approved the Committee Report on the Treasury Budget.

In light of the potential loss of jobs due to the closure of the bank accounts of Oakbay Investments by the four major banks, the Committee mandated the Chairperson to write a letter in solidarity with the employees who currently cannot be paid. The letter will also note that an inter-ministerial committee is dealing with the matter as well as COSATU.

Meeting report

Committee Report on Budget Vote 10: National Treasury
The Chairperson took the Members through the Committee’s Recommendations in the Report and there were not any objections submitted by Members.

Mr R Lees (DA) said that the Democratic Alliance moves for the adoption of the report and they support it.

The Committee unanimously adopted the Report with no amendments.

The Chairperson highlighted that he has spoken to the Chairperson of the Portfolio Committee on Cooperative Governance about the Government Employees Pension Fund – this is one of the Recommendations in the Report.

Financial Intelligence Centre Amendment Bill: Consideration and Adoption
Mr Orlano Makhubela, Chief Director: Financial Investments and Savings, National Treasury, said there were two or three issues that were raised by the DA. After hearing from the Members at the last meeting, it was suggested that the word 'may' be changed in clause 25 to ‘must’. However, this will be subject to conditions (see document for full comments).

The Members all agreed to this alteration.

Mr Makhubela said this provision did not change in relation to the clause that speaks to the sharing of information with National Intelligence. Likewise, the section about the 'investigative division in an organ of state' and the sharing of information with the provincial governance. They think that it is quite useful for the FIC to share information right up to the level of provinces and not only confine it to national government. He said because there is merit, it is proposed that the definition of ‘investigative division in an organ of state’ not be amended to confine it to only national legislation.

The Chairperson noted this and said that the majority party signalled approval as in fairness they had to listen to them as there are good points.

Mr D Maynier (DA) noted that the DA was satisfied that those reservations it had in the definitions clause are captured in the Committee Report on the Bill. They are moving for the adoption of the Bill in light of those captured reservations.

With that being said, the Chairperson said that all the policy issues have been covered and dealt with appropriately.

Adv Frankie Jenkins, Parliamentary Senior Legal Advisor, said section 21E (clause 5 of the Amendment Bill) noted that the institutions should not take up a customer if they are unable to do due diligence on that particular customer or if they cannot identify the customer because essentially the institution would be dealing with an anonymous customer. With regards to the Risk and Compliance Management Programme, it should specify the process and steps the institution should take to exhaust all options to obtain the required information on a customer. This is so the institution can reach a conclusion that it is not possible to identify the customer and provide for the manner in which it will wrap up the transaction with the customer. These steps include either freezing the account of the customer or request further information from the customer – basically these are the progressive steps that the institution should take to decide whether or not it should do business with a customer.

The Chairperson suggested that the Committee vote on the Amendment Bill as a whole

Mr Maynier said the Committee can vote on the Bill as a whole as long as their objection in relation to Section 1(k) is recorded

Mr Lees expressed his concern about the prescriptions of National Assembly Rule 251(3)(c) on the details that are required to be reported in the Committee Report about amendments to a Bill:
Rule 251(3)(c) "must specify each amendment if an amended bill (other than a redraft of the bill) was agreed on by it, and each amendment that was considered and, for a reason other than its being out of order, was rejected by it;"

The Chairperson replied that adhering to the requirement about specifying each amendment in the Committee Report has never been done. It cannot be done in the Committee, because the Committee does not have the capacity to adhere to such prescriptions. However, the Committee looks at the key issues that civil society raised about the Bill and how those issues were dealt with and/or why the Bill was changed. It is the policy issues that are vital and civil society’s input to the Bill.

[PMG note: Adv Jenkins noted that the Committee amendments to the Bill, serves to fulfil the requirements for compliance with NA Rule 251(3)(c).] 

Mr Makhubela took the Committee through the proposed committee amendments.

The Chairperson then took Members through each clause and Members agreed to them.

The Committee moved for the adoption of the Bill, and the Chairperson noted that it will be voted National Assembly on 15 May 2016.

Oakbay Investments inter-ministerial committee
The Chairperson expressed solidarity with the Oakbay Investments employees who are marching to the banks to save their jobs after the four biggest banks in South Africa closed the bank accounts of Oakbay Investments. However, Parliament has to tread carefully on this matter because firstly, the government has decided to have an inter-ministerial committee engage with the four banks and Parliament should wait for the outcome of that engagement. Secondly, COSATU has already discussed the matter with Oakbay management. Thirdly, whatever decision the Committee takes will have to go through the inter-ministerial committee. In the public domain, for what it is worth there are questions about the letter which surfaced and the media has been trying to reach the two people who signed the letter, however, neither of them is prepared to answer any questions and come forward. He then asked the Committee to mandate him to write a letter in solidarity with the employees.

Mr S Buthelezi (ANC) said that the Ministers should be left to deal with this situation, otherwise, there will be a confusion of separation of duties. He also noted that perhaps there are regulatory matters that may need to be clarified, and the regulatory body should provide some clarity on this matter before any steps may be taken by Parliament.

Ms P Kekana (ANC) said that what the four banks are doing is something that should not be entertained and accepted by civil society.

Mr Maynier said he has already raised this matter formally with the Reserve Bank and asked the Bank to investigate because the Reserve Bank is essentially the regulator in the banking sector, therefore, it should play a role in this. The Reserve Bank has responded that they are considering the matter.

Ms T Tobias (ANC) suggested that a thorough verification process needs to take place. The banks have alluded that they have not engaged with government on this matter. So for now it is more like a hearsay situation about what is being done, so before engaging with the regulatory body the authenticity of that letter needs to be verified.

A Member asked whether this is an operational/reputational or legislative matter. If it is the former, the Committee would be getting involved in the wrong space because these financial institutions deal with operational/reputational issues. However, if this is a legislative matter, then Parliament should probably intervene but after a thorough verification process has been done.

The Chairperson concluded the discussion by saying that in his letter, he will write that the Ministers are looking into the matter, as well as COSATU (but, he said he will double check with COSATU president, Mr Sdumo Dlamini, on this), and that the Committee is in solidarity with the workers.

The meeting was adjourned.

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