General Laws (Anti-Money Laundering and Combatting Terrorism Financing) Amendment Bill: adoption

This premium content has been made freely available

Finance Standing Committee

11 November 2022
Chairperson: Mr J Maswanganyi (ANC)
Share this page:

Meeting Summary

Video

The Standing Committee on Finance met on the virtual platform to consider the General Laws (Anti-Money Laundering and Combatting Terrorism Financing) Amendment Bill.

The legislation is an omnibus Bill 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 the global regulator of anti-money laundering and counter terrorism financing.

Following a briefing by National Treasury on the proposed amendments to the Bill, the Committee – via a majority - adopted the bill. The Democratic Alliance and the ACDP reserved their positions on the entire bill.

The Committee noted the legal opinion obtained by National Treasury from senior counsel, which analysed the provisions of the Bill in respect of their compliance with the Bill of Rights in the Constitution and advised accordingly.

The accompanying committee report on the bill was also considered and adopted by the majority.

The Chairperson said it is not in the interest of anybody to have the country grey-listed as that will have dire consequences. It is in the national interest that this bill and the FIC regulations are adopted.

Meeting report

The Chairperson greeted and welcomed members of the Committee, officials from the Financial Intelligence Centre (FIC), National Treasury, and the South African Revenue Service (SARS) as well as guests on the platform and declared that the meeting was open.

Apologies were noted.

Adv S Swart (ACDP) indicated that he found the legal opinion helpful and hoped National Treasury would point out where the legal opinion is relevant and where there have been amendments introduced as a result of it, especially about prescribed requirements at the end.

General Laws (Anti-Money Laundering and Combatting Terrorism Financing) Amendment Bill: clause-by-clause deliberation

Ms Jeannine Bednar-Giyose, Director: Fiscal and Intergovernmental Legislation, National Treasury, indicated she would do so as requested by Adv Swart.

She took the Committee through the tabled bill and highlighted where proposed amendments were being made.

The Chairperson sought clarity on how the Committee would consider the amendments. As National Treasury goes through the amendments, would they pause after each one to consider it or only do so after the entire presentation has been made?

The Committee Secretary explained that in the past the Committee went through the tabled version of the bill and if there are proposed amendments in the A-list, National Treasury briefs the Committee on this, and the Committee agrees to it or not and moves on to the next clause.

The Chairperson asked if Members should be asking questions as and when the presentation on a particular clause is being made or wait until the end. He wanted to move faster and be more effective because there are a lot of clauses.

The Committee Secretary said what would help is that National Treasury sent through a B version of the Bill, which shows how it will look after the amendments have been agreed to. This can be flighted. The proposed amendments on the A list is included in the B version.

Mr Ismail Momoniat, Acting DG, National Treasury, supported the comments by the Secretary and indicated that it would be easier for Members to see what the amendment is if they see the B Bill. It would be much easier and the Committee could come to the A version afterwards. The B Bill is better to flight because one can see the changes on the screen. Members can discuss whenever they want to.

Adv Swart agreed. It was important for the Committee to understand that what National Treasury is going through is further proposed amendments to the bill as drafted and what everyone on the platform would like to have is a better understanding of those amendments. It would be useful to slot in the B version and highlight those amendments that are in the A list.

The Chairperson asked the presenter to take the Committee through the B list and to simultaneously take the Committee through the issues she wants to raise.

Ms Bednar presented this document: [B18 - 2022] General Laws A/B Indicating Amendments Proposed

On the long title, she explained that the wording highlighted in yellow are minor refinements proposed to capture the scope of the other amendments that are proposed in the bill. It is to allow the long title to be align with the final version of the bill.

Clause 10

Adv Swart referred to clause 10(b)(iii) and noted that the NPO asked Ms Bednar-Giyose to provide an example of what would be considered as another organ of state. There is existing registration with SARS for NPOs. What is in mind?

Ms Bednar-Giyose explained that it would be up to the Directorate to determine the precise nature of arrangements that might be engaged in under this section with other organs of state. That could potentially be if another organ of state had a system that was appropriate to support the maintenance of the register or some expertise or capacity to assist with the maintenance of the register of information that the Directorate is required to maintain, the Directorate could enter into an arrangement may be on the secondment of staff or make use of systems that might be operational in relation to an organ of state. At this stage, there is not any specifics organ of state that has been identified as this clause emerged from the public comments process.

As the Department of Social Development is undertaking the process of amending the Nonprofit Organisations Act, there may be some proposals in this legislation as it relates to how the Directorate will perform its functions and how it will be situated, structured. National Treasury was trying to be facilitative and not setting out specific proposals at this stage. It wanted to take into consideration the comments received by stakeholders and members and enable some arrangement to facilitate the directorate to be undertaken.

Clause 11

Adv Swart sought clarity on clause 11(d). He understood why a registered nonprofit organisation must comply with the Act but he did not understand why a non-registered NPO must comply with the Act. He was thus uncertain about the insertion of (d).

Ms Bednar-Giyose explained that what paragraph d is intending to convey is if a NPO is now required to register in terms of the Act under paragraph b, even if they then decided not to obey that requirement and not apply to register under the Act, they would still be bound to comply with the requirement of the Act. This so one does not have people who refuse to register or become licensed when they are required to do so and go on carrying on activities. In this case, not providing the information that they are required to provide and the legislation would be ineffective because there would be institutions contravening and ignoring the legislation. That is the intention of the paragraph to not have institutions that are required to be licensed by wouldn’t be and could just ignore and refuse to comply with the requirement of the Act.

Adv Swart thanked Ms Bednar-Giyose for the clarity.

Ms Bednar-Giyose referred to paragraphs b and c and highlighted an error. Reference to subsection 1(a) should be changed to subsection 1(b).

Members agreed to this amendment.

Clause 17

Adv Swart said as the provision is helpful because an administrative sanction is less severe than a normal penalty. He sought clarity on what an “administrative sanction” would be.

It is difficult to gauge what an amount would be but what would be helpful is the understanding that it is a financial sanction and not a term of imprisonment as is under section 30 which speaks of a fine and imprisonment in respect of other offences related to the Act.

Ms Bednar-Giyose replied that the administrative sanction would definitely not include imprisonment and it would commonly be in the form of a fine. There may be non-financial action like notices or directives to comply. These could be in combination with financial sanction. In this regard, the Treasury would be exploring with the Department of Social Development and the amendment of the NPO Act so that there would be more clarity on the types of administrative sanctions that could be used. It would not involve a prison sentence. It would involve a financial sanction proportionate to the contravention or a non-financial measure to promote compliance.

Following the presentation

Adv Swart asked about the transitional clause in the A list. He was not sure if this was mentioned when the Committee went through the Bill. Also, there was a deeming provision that he missed – where if a director does not register within a specified period, it is deemed to have been registered.

Ms Bednar-Giyose explained that there was a provision in the amendments to section 12 of the NPO Act. She apologised for not mentioning it.

Clause 12 (8) provides: A nonprofit organisation that has submitted an application for registration is deemed to be registered unless and until the director has given notice to the applicant in terms of subsection (3) and the process envisaged in subsections (4) to (6) has been completed.”.

This means an applicant would effectively be considered to be registered once they have submitted their application unless the director has issued a notice that it is of the view that the NPO does not comply with the requirements for registration. There is a process that can be undertaken where the NPO has a period within which they can take steps to comply with the requirements that may have been highlighted by the director. Only after the NPO has been given that opportunity to comply or alternately may not have taken steps to comply, would the director be then able to refuse the registration of the NPO. At that stage, it would not be considered to be registered. The provision is intended to give a bit of certainty and comfort to NPOs that may already be operating and have had to apply for registration that they can continue to operate and they are considered to be registered unless there are issues identified through the appropriate processes.

Adv Swart added that it is important to note that it is an objective determination based on jurisdictional facts by the director. There is no subjective discretion, as he understood it. The legal opinion confirms this as well. There is no value judgement or anything that the director can consider when applying the criteria as to whether the registration is accepted or not. That gives some comfort. Notwithstanding this, any decision is reviewable. 

Ms Bednar-Giyose agreed with Adv Swart. That was the intention and their understanding also.

There were no other questions or input.

Voting on the Bill

The Chairperson sought clarity if the Committee need to vote clause-by-clause on the Bill.

Adv Frank Jenkins, Senior Parliamentary Legal Advisor, Constitutional and Legal Services Office, confirmed that the Committee would have to adopt the proposed bill clause by clause. The rules require this. The method of doing so not does not mean that each clause has to read out fully.

The Committee went through the long title and all 66 clauses. Members had to indicate if they agreed or not.

Adv Swart indicated that the ACDP expressed that it reserved its position on the NPO clauses. It wanted to consult further.

The amendment bill was adopted with majority support. The Democratic Alliance and the ACDP reserved their positions on the entire bill.

Consideration and adoption of the Committee Report

The report was tabled for consideration.

The Committee focused on the observations and recommendations.

Dr D George (DA) commented that there is a significant challenge with the registration of the NPOs by the Department of Social Development, so he wanted to put on record that he did not think 6.7 was doable and desirable.

Adv Swart made a minor amendment to paragraph 1.7. On paragraph 1.10, he said that POCDATARA abbreviation needs to be written out in full.

The adoption of the report received majority support and was adopted. The DA and the ACDP reserved their positions on the Committee Report.

The Chairperson indicated that the report would be sent to the National Assembly for debate.

Read: ATC221111: Report of the Standing Committee on Finance on the General Laws (Anti-Money Laundering and Combatting of Terrorism Financing) Amendment Bill (B18B-2022), dated 11 November 2022

The Committee Secretariat indicated that the report will be ATC’d and the amendment bill as adopted would only be available on Monday

The Chairperson thanked all the entities that were involved in processing the bill. It was not an easy journey. The Committee is doing everything to ensure that the bill goes to the Assembly and is passed. It is not in the interest of anybody to have the country grey-listed as that will have dire consequences. It is in the national interest that this bill and the FIC regulations are adopted.

The meeting was adjourned

Download as PDF

You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.

See detailed instructions for your browser here.

Share this page: