The Select Committee on Security and Justice met on a virtual platform for a briefing from the Department of Police and the Civilian Secretariat for Police Service (CSPS) on the Protection of Constitutional Democracy Against Terrorist and Related Activities Amendment (POCDATARA) Bill. The presentation dealt with the purpose of the Bill, the necessity for promoting it, the parliamentary process of amending it, the amendments that the Portfolio Committee on Police had already made, and what the B version of the Bill provided for.
The Finance Intelligence Centre explained what the Financial Action Task Force (FATF) was, and how the grey-listing process worked and its relevance to South Africa. The FATF was an international inter-governmental body that set international standards for implementing measures to combat money laundering and the financing of terrorism. It aimed to protect institutions from being used for illicit financing purposes. The FATF’s standards required the implementation of measures that criminalised the financing of terrorist organisations. This included measures that allowed countries to freeze assets and prevent assets from being accessed by terrorist organisations or individuals involved in terrorist activities. Once its evaluation of a country was completed, there was a follow-up process to ensure that all countries played by the same rules, were committed to the implementation of the standards, and that they did so effectively. A country was given a specific amount of time to report back to the organisation, and the FATF would then decide whether the country’s measures to address the deficiencies were adequate.
The Deputy Minister said failure to comply with standards set by international bodies in South Africa would result in consequences such as grey-listing. The implication and impact of grey-listing, given the economic challenges the country faced, would be the inability of South Africa to do business with other countries at a time when the country needed investments. Several factors necessitated South Africa to be in line with their peers in terms of their response to the issues at hand.
The Committee raised issues concerning the financial implications of the Bill, the possible consequences for South Africa if it were to be grey-listed, the short deadlines the Constitutional Court had set, and questioned whether the Bill had been influenced by other international and regional organisations dealing with terrorism, of which South Africa was a member.
Concern over short POCDATARA Bill processing deadlines
The Chairperson said the Committee would deal with the first item on the agenda, which was the briefing on the Protection of Constitutional Democracy Against Terrorist and Related Activities (POCDATARA) Bill. The intention was to attend to developments in international law, to give effect to certain Constitutional Court judgments and address challenges experienced with conducting investigations and prosecutions.
The Minister of Police had addressed a letter to the Committee that was copied to the Chairperson of the National Council of Provinces (NCOP), which requested that the Bill be dealt with expeditiously to prevent South Africa from being grey-listed by the global anti-money laundering body -- the Financial Action Task Force (FATF).
With this in mind, it had been decided to develop a programme that aimed to meet the deadline. It was a proposed programme, but they wanted to ensure that the public was given time to engage and comment on the Bill.
She was sure the Department of Police would elaborate on what amendments had been made by the Portfolio Committee on Police.
Mr G Michalakis (DA, Free State) said he was becoming increasingly uncomfortable with the way the Committee was being forced to deal with legislation, as this was the second Bill where significantly short deadlines had been given by outside parties [referring to the Electoral Amendment Bill]. This was either due to work done or not done by the Executive and the other House of Parliament. This Committee could not apply their minds to legislation of his nature in the way it was currently required. He was uncomfortable with the way the NCOP had been treated, regardless of political affiliation. They had been expected to rush through legislation due to the Executive and National Assembly’s lack of consideration for the NCOP.
He asked the Chairperson of the Committee to take this issue up with the Chairperson of the NCOP, as the NCOP’s work was as important, and it had a constitutional mandate to ensure that decent legislation was passed through Parliament.
The Chairperson noted these issues, and said Mr Michalakis’s concerns had been raised by other Members at a personal level. She, too, had raised these concerns with the Chief Whip and the House Chair, and would perhaps elevate these matters to the Chairperson of the NCOP.
Presentation on POCDATARA Bill
Mr Cassel Mathale, Deputy Minister of Police, said the presentation would be led by Mr Takalani Ramaru, Acting Secretary of the Civilian Secretariat for Police Service (CSPS) and his team, which included Adv Dawn Bell, Chief Director of Legislation, CSPS.
Mr Ramaru said Adv Bell would be dealing with the first part of the presentation which highlighted the process used. Adv Ulinda Kritzinger, Legislation, CSPS, would be doing the detailed presentation.
He introduced Brig Bert van der Walt, Legal Adviser: South African Police Service (SAPS), and Mr Pieter Smit, Executive Manager: Financial Intelligence Centre (FIC), who would respond to possible questions.
Adv Kritzinger said the purpose of the Bill was to address the deficiencies in the current POCDATARA Act due to findings made by the United Nations Counter-Terrorism Executive Directorate (UNCTED) and the Financial Action Task Force (FATF).
The necessity for promoting the Bill was due to:
Developments in international law;
Compliance resulting from oversight done by the UNCTED and FATF; and
Compliance resulting from oversight done by the South African courts.
The Bill was introduced in Parliament for processing in July 2022. The Portfolio Committee on Police (PcoP) published the Bill for public comments in August, and the public submission period was extended due to the number of submissions received. The PCoP had made several amendments to proposed clauses in the Bill, but no amendments were made to the main elements of the Bill.
Amendments made by the PCoP were to Clauses 1, 2, 3 and 20 of the Bill. The B-Version of the Bill provided for clauses 1,2 and 3 of the Bill.
(See attached document for details)
The Chairperson thanked the Deputy Minister, the Acting Secretary of the CSPS and the legal team that had put the presentation together. She asked the Department to elaborate on the possible consequences for South Africa if it were grey-listed, and what steps were being taken to avoid a grey-listing.
Mr T Dodovu (ANC, North West) said that on 21 May 2021, the CSPS published a notice in the Government Gazette that invited public comments on the Bill. The notice stated three important reasons for the amendment of the Act. The first was that updates to the legislation were needed to ensure it was compatible with international terrorism trends and law, and the second was to give effect to the Constitutional Court's judgment. Mr Dodovu asked what specific areas had been highlighted by the judgment, and if the judgment had deemed certain provisions of the legislation invalid, which were the provisions? He asked what deadlines had been given by the Constitutional Court.
The Chairperson asked if any other financial implications were associated with this Bill.
Responses from FIC, SAPS and CSPS
Mr Smit said it would be useful for him to explain what the FATF was, and how the grey-listing process worked and its relevance to South Africa. The FATF was an international inter-governmental body that set international standards for implementing measures to combat money laundering and the financing of terrorism. It aimed to protect institutions from being used for illicit financing purposes. The FATF’s standards required the implementation of measures that criminalised the financing of terrorist organisations. This included measures that allowed countries to freeze assets and prevent assets from being accessed by terrorist organisations or individuals involved in terrorist activities.
This was the impetus for the amendments of the Act in question. Section 4 of the Act was being amended to improve its provisions. These provisions had been pointed out because the system would assist the definitions.
Other amendments focused on the implementation of the UN Security Council-targeted financial sanctions. There was also an amendment to the Financial Intelligence Centre Act (FICA) to address the findings. Grey-listing was being discussed because once a country had been passed by the FATF, they were given time to address the findings and improve upon the deficiencies identified in the mutual evaluation.
Mr Smit explained that the mutual evaluation was a peer review. South Africa was a part of the FATF, and therefore its peers were other countries that were members of the FATF. Once the evaluation was completed, there was a follow-up process.
The point of the follow-up was to ensure that all countries played by the same rules, were committed to the implementation of the standards, and that they did so effectively. A country was given a specific amount of time to report back to the organisation, and the FATF would then decide whether the country’s measures to address the deficiencies were adequate.
The peer review and peer pressure principles were applied when a country had not addressed the findings or the inadequate measures. Members of the FATF would then pressure each other in the form of a grey-listing.
He said the measures to address the findings were amendments to the legislation, and a large team was working under the direction of the Acting Director-General of National Treasury to address the findings in all areas. These areas included the financial sector supervision, criminal investigations and prosecutions of territorial financing, and providing information on things such as the beneficial ownership of companies to financial institutions.
The things South Africa had to do to address the findings from the evaluation were wide-ranging.
These included the amendment of provisions in the Act in question related to financial sanctions and the criminalising of terror financing, which were a part of recommendations made by the FATF. The third recommendation made by the FATF was the requirement that financial institutions needed to do due diligence on their customers.
These recommendations were a part of the core elements that the FATF considered essential building blocks for an effective system to combat money laundering and terrorism financing.
These standards were important for South Africa to address.
Mr Smit said the consequences of grey-listing were severe, as it announced to the world that the country had strategic deficiencies and those core elements of the country’s system were not up to standard. Financial institutions around the world would take this into account when deciding to continue doing business with their counterparts in grey-listed countries, as this could expose them to higher risks of money laundering or terror financing being funnelled through relationships they had with financial institutions in grey-listed countries. Therefore more scrutiny would be needed on their part, which was costly and slowed down business and cross-border rate financing and support for import-export business.
Mr Smit noted that the European Union (EU) had passed a law that required European institutions to consider grey-listed companies as higher risk. However, details had not been provided on which institutions and sectors in a grey-listed country this law applied to. This meant a grey-listing would significantly impact South Africa’s relationships with European countries. There were great consequences to a grey-listing.
Mr Smit concluded that the perspective being taken by South Africa under the direction of the Acting Director-General of National Treasury was that whatever was necessary to address the findings of the evaluation needed to be done. This was because it was important to protect South African systems from exploitation.
He said they were committed to meeting the international standards of the FATF, as they were important for protecting the South African system. The purpose of the amendments was to protect the system and to meet the standards of the FATF to demonstrate to the world South Africa’s commitment.
Ms Kritzinger responded to the question concerning the Constitutional Court judgments that had influenced the amendments to the legislation. She said the Constitutional Court's judgment on the Henry Okah 2018 matter had found its application in the Bill in clause 13, which sought to amend section 15 of the Act. Section 15 of the Act dealt with jurisdiction issues concerning offences. The court did not find section 15 unconstitutional, but rather believed that the language used in it needed to be simplified. The clause needed to be amplified regarding jurisdictional issues and also addressed the issue of warrants in respect of offences in terms of the Principle Act obtained under the Criminal Procedure Act.
As soon as the court ruled on the matter, the Department started initiating amendments to the Act based on its ruling.
Deputy Minister Mathale emphasised the issues referred to by Mr Smit, and said that since the new democratic dispensation in 1994, South Africa had become a part of the United Nations. This meant they were a part of the international community and thus guided by the protocols of these forums. South Africa needed, from time to time to be in line with its international counterparts when dealing with challenges faced by humanity. The bodies that South Africa was a part of, required the countries to follow certain rules to create uniformity in terms of responses to specific issues. Regarding terrorism, there were instruments that South Africa needed to implement to be able to respond in uniformity with other countries. The legislation in the presentation was just one of the measures needed for compliance with international standards.
Failure to comply with standards set by international bodies in South Africa would result in consequences such as grey-listing. The implication and impact of grey-listing, given the economic challenges the country faced, would be the inability of South Africa to do business with other countries at a time when the country needed investments. Several factors necessitated South Africa to be in line with their peers regarding their response to the issues at hand.
The Deputy Minister said that note had been taken of the issues that the Committee had raised, and through the proper channels, these concerns would be addressed to ensure that the NCOP was not forced to work under duress. It was important for the NCOP to process the legislation to ensure that South Africa was not left in an undesirable position.
The Chairperson thanked the Deputy Minister and his team for their presentation and responses to the Committee’s concerns. She noted that her question concerning the financial implications of the Bill had not been addressed, but said the Deputy Minister could respond to that at another time.
Mr Dodovu said South Africa was not immune to terrorist attacks. There had been elements of terrorism detected as early as 2013, which had been demonstrated in the presentation with the Thulsie twins, and people who were going to Syria for training. He was concerned that the FATF was the only international organisation that was mentioned that South Africa was a member of and had to follow its international guidelines. He asked about other relevant organisations. What influence would other organisations such as the African Union (AU) and the Eastern and Southern African Anti-Money Laundering Group, have on the Bill being discussed?
Mr Ramuru responded that the Bill considered all the conventions of international and regional organisations of which South Africa was a member.
He commented on the financial implications of the Bill. The amendments were to strengthen and update the principal Act as it currently stood, and there was no anticipation of further financial implications beyond the issues around grey-listing. What the relevant departments and state organs budgeted as their baselines would remain the same and would cover any costs brought about by this new Bill.
The Chairperson thanked Deputy Minster and his team, and said this was not the end of engagements with them. However, for now, they understood the importance and implications of the amendments being made to the legislation.
She said a draft approach had been developed to process the Bill. The Committee had also requested a legal opinion on the public participation process they intended to follow, given the impact of the Bill. The Bill would be advertised for public comment from 30 November, to 1 pm on 6 December. The Committee would then meet on 7 December for oral submissions with the Department. This was to make sure the Department could respond to the submissions. The document had been sent to Members of the Committee, and if clarity was needed, they were welcome to ask the Chairperson or the Committee Secretary.
Adoption of Minutes
The Chairperson suggested that the adoption of old minutes be dealt with at a different time, as some of the relevant Members of the Committee were not present. She asked if this was acceptable.
Ms M Bartlett (ANC, Northern Cape) asked that the minutes be dealt with in this meeting, as the Committee did not have much time left and still needed to consider another bill.
The Chairperson said the minutes would then be dealt with in this meeting.
The minutes dated 16 March dealing with the implementation of the Domestic Violence Act were considered and adopted as presented.
The minutes dated 20 April dealing with the Child Justice Regulations were considered and adopted as presented.
The minutes dated 28 April dealing with the SAPS annual performance plan (APP) were considered and adopted as presented.
The minutes dated 4 May dealing with the APPs of the CSPS and the Independent Police Investigative Directorate (IPID) were considered and adopted as presented.
The meeting was adjourned.
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