FICA Bill and Committee Report: adoption

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Finance Standing Committee

21 February 2017
Chairperson: Mr Y Carrim (ANC)
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Meeting Summary

The meeting began with deliberations on the Committee Report on the referral of the Financial Intelligence Centre Amendment Bill [B 33B–2015]. This report contains the Committee’s conclusions regarding comments from the President on the Financial Intelligence Centre Amendment Bill.

There were no further changes to the Committee proposed amendments to the FICA Bill and both the Bill and the Committee Report were adopted with minimal discussion.

The Chairperson provided commentary on the Committee response to Mandatory Audit Firm Rotation, its media statement on the Competition Commission report on banks’ forex collusion and the Committee Hearing on Banks on 14 March.

Meeting report

Committee Report on Referral of Financial Intelligence Centre Amendment Bill [B33B-2015]
The Committee deliberated on the draft report.

Mr S Buthelezi (ANC) commented on paragraph 11; he felt the paragraph needed to specify more clearly that the Committee had met with private senior counsel, Adv Jeremey Gauntlett, and taken his opinion into account.

The Chairperson agreed that the paragraph should be updated to reflect this if it is not clear already.

The Chairperson discussed point 1 of the report on clause 32 of the FICA Bill, which amends section 45B of the 2001 Act (as amended in 2008). He stated that clause 32(a) was normal procedure and did not require a warrant. More detail was necessary in the case of 32(b).

Adv Empie van Schoor, National Treasury Chief Director: Legislation, explained that clause 32(a) applies to licensed premises and an inspector does not need a warrant to search them. Clause 32(b) refers to unlicensed premises and private residences where business is conducted. In this case, there are three ways an inspector can legally search the premises. Firstly, they can acquire consent of the relevant people. Secondly, they can acquire a warrant from a judge. Finally, an inspector can get prior written authority from the Financial Intelligence Centre board or the relevant supervisory body.

The Chairperson stated that nothing would be changed with regards to this subclause.

Voting on FICA Bill and Committee Report
The Committee then voted on the Bill. It was proposed by Mr Buthelezi and seconded by Ms P Kekana (ANC). The Committee also adopted the Committee Report.

The Chairperson stated that there were certain absent Committee members that still needed to be consulted, including some from opposition parties. He reminded members that upcoming discussion and debate in the National Assembly would remain limited to considering the President’s concerns.

Mandatory Audit Firm Rotation
The Chairperson stated that he would draft a letter to the Independent Regulatory Board for Auditors (IRBA) for members to consider. He felt that the majority of the Committee agreed broadly with the principle of Mandatory Audit Firm Rotation (MAFR). Secondly, however, the majority was not decided on how MAFR relates to the country’s broader goals including transformation. Thirdly, he stressed that it was important to negotiate. At this point he made a brief comment about a balance of forces between capitalist big business and the will of the working class. He felt that the Committee agreed that there had been insufficient consultations performed by IRBA on its decision to introduce MAFR from April 2023.

The Committee agreed to the Chairperson’s proposed letter.

Media Statement on Competition Commission report on banks’ forex collusion
The Chairperson spoke about the media statement released by Parliamentary Communication Services, on behalf of the Chairperson and the Standing Committee on Finance. The statement “welcomes the Competition Commission’s long-overdue investigation into possible banks’ collusion on the manipulation of currency trading and its decision to refer this to the Competition Tribunal for prosecution” (see below). The Committee will await the decision of the Competition Tribunal. The Committee will hold an open hearing on the banks on 14 March. The statement also indicated that the Committee believed the situation regarding the banks emphasised the need for the Financial Sector Regulation Bill to be finalised. He added that it also speaks to the need to deal with the monopolies in the banking sector, and the need for transformation in the economy.

Committee Hearing on Banks
The Chairperson continued that the Committee wanted the banks to play a better role in transforming the country in the people’s interest. This statement is consistent with the majority party view. It would be appropriate for the Committee to allow these issues to arise on the 14 March. Secondly, there will be a structured discussion when the tribunal was finished and had reached a decision. Banks should participate in the discussion on 14 March. Several other stakeholders and bodies should be present, including the Department of Trade and Industry, the Financial Sector Charter Council, National Treasury, Nedbank and other relevant parties as far as possible. He wanted smaller-business owners to also be part of discussions, as well as bodies that represent smaller businesses or informal traders. There is also a Conduct of Financial Institutions Bill pending.

Committee Programme
The Chairperson discussed upcoming meetings. The Committee would withhold from sitting after 16 March. He suggested that the Committee sit from 10am-4pm on Wednesday and Thursday. On 15 March the Committee would meet to discuss illicit financial flows. The Chairperson had recently attended a global tax transparency conference in London and was offered to sign a document in support of openness in multinationals – he would like the Committee to adopt and sign this document.

The Chairperson closed the meeting by noting other relevant meetings and sittings that may be useful for members to attend.

The meeting adjourned.

Media Statement: Finance Committee Welcomes Report on Banks’ Collusion on Manipulation of Currency Trading
Parliament, Friday 17 February 2017 – The Standing Committee on Finance welcomes the Competition Commission’s long-overdue investigation into possible banks’ collusion on the manipulation of currency trading and its decision to refer this to the Competition Tribunal for prosecution.

“Obviously, the banks have to be given a fair chance to respond to the allegations and the Tribunal needs the space to make an independent decision on the matter. But if the banks are found guilty of wrongdoing we hope the Tribunal will take appropriate strong action. After all, it’s the poor and low income earners who would have suffered disproportionately from any market abuse,” said Yunus Carrim, Chairperson of the Standing Committee on Finance.

Mr Carrim said if there has been wrongdoing, not just the banks, but the individuals responsible should be acted against. He said the Committee has noted the strong action taken elsewhere in the world, not least in the United States and United Kingdom, when similar actions of wrongdoing were proved.

The Committee is of the firm view that the Competition Commission’s investigation has reinforced the need for the finalisation of the Financial Regulation Bill before the National Council of Provinces at the moment, and other legislation to regulate the banks more effectively in the public interest.

Mr Carrim said that consideration may also have to be given to whether further regulation is required should the banks be found guilty.

“The investigation also highlights the concerns about four banks controlling about 90% of the market and the need to create space for new entrants, not least the Postbank. As soon as the Competition Tribunal has completed its work, the Finance Committee will consider the issue in a structured way, but in the meanwhile it is likely to emerge in the Committee’s public hearings on transformation of the financial sector that begin on 14 March,” said Mr Carrim.

The Committee acknowledges that banks are crucial to the economic growth and development goals of the country. It also understands that transformation of the financial sector is geared towards ensuring that the banks contribute effectively to the economic growth in their own and the country’s interests.

Mr Carrim emphasised that transformation does not mean a reckless populism that will ultimately undermine the interests of the poor and disadvantaged. He said it needs to be negotiated as far as possible.

Issued by Parliamentary Communication Services on Behalf of Chairperson of Standing Committee on Finance, Mr Yunus Carrim

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