Protection of Constitutional Democracy Against Terrorist and Related Activities Bill: consideration

NCOP Security and Justice

27 October 2004
Share this page:

Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report

041027scsecurity

SECURITY AND CONSTITUTIONAL AFFAIRS SELECT COMMITTEE
27 October 2004
PROTECTION OF CONSTITUTIONAL DEMOCRACY AGAINST TERRORIST AND RELATED ACTIVITIES BILL: CONSIDERATION

Acting Chairperson:
Mr S Shiceka (ANC) [Gauteng]

Relevant documents
Protection of Constitutional Democracy Against Terrorist & Related Activities Bill [B12B - 2003] (Draft of 27 Oct)
NCOP Proposed Amendments to Bill
Submission by RAU Centre for Study of Economic Crime
Submission by Standard Bank

SUMMARY
The Department of Safety and Security presented proposed amendments to the Protection of Constitutional Democracy against Terrorist and Related Activities Bill. The amendments were largely technical in nature, but also dealt with the definitions of 'engages in a terrorist activity', 'property' and 'terrorist activity' in Clause 1; and provided in Clause 17 that there be no dual reporting obligation on banks in terms of Clause 12. Clause 28 was amended to allow the President and not Parliament to determine the date on which the Act would come into operation, and the National Commissioner of Police was obliged to issue directions on reporting procedures.

The Committee also considered a submission by Standard Bank which raised concern with a potential loss of anonymity in reporting terrorist financing, as the Bill did not currently contain a clause that dealt with this, and the continuation of transactions when terrorist financing was expected. The Committee subsequently amended Clause 28(2) to deal with this concern. The Department also requested the Committee to expedite the passage of the Bill before the 16 November 2004 deadline.

MINUTES
The Acting Chair apologised for the delay in commencing the meeting. He explained that the Chairperson could not attend because he was part of the Judicial Service Commission (JSC) that was currently dealing with transformation in the appointment of judges, which was a very important matter. He stated that the Bill had caused many heated debates and discussions, and the NCOP wanted to pass it before 16 November 2004.

The invited delegation included: Advocate P Van Wyk, Researcher: South African Law Reform Commission; Mr P Smit, Legal Advisor: Financial Intelligence Centre; Dr PC Jacobs, Assistant Commissioner: South African Police Services and Advocate G Nel, Legal Advisor: National Prosecuting Authority

Department of Safety and Security briefing
Dr PC Jacobs, Assistant Commissioner: South African Police Services (SAPS), informed Members that the Draft Bill handed out (document attached) contained all the previous amendments that were adopted by the NCOP as well as the amendments proposed thereafter by the Safety and Security Portfolio Committee. The proposals made at the last meeting of this Committee by Professor De Koker of the RAU Centre for the Study of Economic Crime (submission attached) were also included in the Bill, which was supported by the Financial Intelligence Centre (FIC). The crux of the Bill was probably the amendment effected to Clause 1(2) which related to the exclusion in the definition of 'terrorist activity' of certain industrial action. Dr Jacobs stated that he had included footnotes in the Draft Bill as well to inform Members of the origin and purpose of the amendments contained in the Draft Bill. Most of the amendments have been proposed before.

He stated that research had been conducted on the use of the word 'thing' in South African legislation, and the Department was satisfied that the use of the word was appropriate and was consistent with other legislation.

With the exception of one issue, all the concerns raised in the Standard Bank submission (document attached) were covered by previous amendments.

Preamble
Dr Jacobs stated that, as reflected in the footnote, the Committee had previously accepted an amendment proposal.

Chapter 1: Definitions and interpretation
Clause 1: Definitions

'engages in a terrorist activity'
Dr Jacobs stated that this was a new definition, which was shifted from Clause 2 to its proper place in the definitions clause. This was thus not a substantive amendment. As reflected in the footnote, this proposed amendment was accepted on a previous occasion by the Committee.

'property'
Dr Jacobs stated that this definition was in line with the recommendations both of Professor de Koker and Standard Bank.

'terrorist activity'
Dr Jacobs stated that, as reflected in the footnotes, the proposed amendment to Clause 1(xxiv)(iii) emanated from proposals made by COSATU and the wording proposed follows the recommendation made by the Portfolio Committee.

The proposed amendments to Clause 1(xxiv)(vi)(gg) were merely a technical amendment. The amendments to Clauses 1(xxiv)(viii) and 1(xxiv)(vii(b)(i) were adopted by the Committee on a previous occasion.

'terrorist activity'
Dr Jacobs stated that the main difference in the wording proposed in the new Clause 1(3) was that, as reflected in the footnotes, the word 'lawful' had now been removed and the phrase 'which does not intend' had been inserted. The deletion of the word 'lawful' was in line with the Canadian legislation.

Clause 1(4)
Dr Jacobs stated that this was merely a technical amendment, which was also previously approved by both the NCOP and the Portfolio Committee.

Clause 1(6)
Dr Jacobs stated that the amendments were proposed by Professor de Koker and Standard Bank, and they sought to align the definition with the wording presently used in the Financial Intelligence Centre Act as well as the Prevention of Organised Crime Act.

Chapter 2: Offences
Clause 2: Offence of terrorism

Dr Jacobs stated that the definition of the phrase 'engaged in a terrorism activity' had already been inserted in the definitions, and this was the only reason the amendment proposed its deletion from this portion of the Bill. This amendment had already been approved both by the NCOP and the Portfolio Committee.

Clause 12: Duty to report presence of person suspected of intending to commit of having committed an offence and failure to so report
Dr Jacobs stated that the proposed insertion of 'as soon as reasonably possible' should be accepted.

Chapter 3: Provisions relating to offences and penalties
Clause 15: Jurisdiction in respect of offences
Dr Jacobs stated that all these amendments were previously adopted by the NCOP as well as the Portfolio Committee.

Clause 17: Evidential matters and exclusions
Dr Jacobs stated that this amendment was proposed by Professor de Koker and Standard Bank. It completed the picture by providing that there was no dual reporting obligation on banks in terms of Clause 12.

Clause 19: Declaration of forfeiture on conviction
Dr Jacobs stated that this was merely a technical amendment to remove the use of italic print. This amendment had already been adopted by the NCOP and the Portfolio Committee.

Chapter 5: Resolution of United Nations Security Council
Clause 25: Notification by President in respect of entities identified by United Nations Security Council

Dr Jacobs stated that the same technical amendment was proposed here as well as another technical semantic amendment, both of which were previously adopted by the NCOP and Portfolio Committee.

Chapter 6: General Provisions
Clause 28: Short title and commencement
Dr Jacobs stated that this amendment was proposed by the Committee itself, and allowed the President and not Parliament to determine the date on which the Act would come into operation. A new Clause 28(2) was proposed because Clause 12(2) required the National Commissioner to issue directions on how reporting would have to take place.

Schedule
Dr Jacobs stated that this was a new proposed amendment that sought to correct a technical error in the fourth column relating to Act 76 of 1962. The amendments relating to the column that deal with Act 87 of 1993 and Act 38 of 2001 had been approved by the NCOP and the Portfolio Committee on a previous occasion. The new proposed amendment to Section 29 of Act 38 of 2001 was proposed by Professor de Koker, and the amendment would be an improvement. The proposed technical amendment to Section 35 of Act 38 of 2001 was previously adopted by the NCOP and the Portfolio Committee.

Standard Bank Submission
Dr Jacobs stated that the Standard Bank proposal relating to the continuance of transactions was not covered in the Bill, and this might have to be considered by the Committee.

Mr P Smit, Legal Advisor: Financial Intelligence Centre (FIC), stated that the submission raised concerns with the definition of the term 'knowledge', lack of consistency of definitions, failure to incorporate a suitable defence for persons that reported suspected terrorist activity to the FIC, the reporting of transactions that are 'unnecessarily complex' or that 'form part of an unusual pattern of transactions', but all these matters have now been addressed in the Bill.

The submission raised concern with a potential loss of anonymity in reporting terrorist financing, and the Bill did not currently contain a clause that dealt with this. The submission argues that Section 29 of the FIC Act granted the person reporting anonymity whereas this kind of clause was not contained in the Bill, and Standard Bank feared that such persons could thus be victimised..

He stated that this could possibly happen in practice. The fact of the matter was that it would be helpful to include such a clause in the Bill. If this were not done then institutions would interpret their obligations as narrowly as possible and would only report in the very few cases in which they actually had no other choice.

A further concern raised by the submission but which was not covered by the Bill was the continuation of transactions when terrorist financing was expected. The FIC Act required such a transaction to be reported to the FIC but then allowed the transaction to continue, unless they were subsequently requested to stop the transaction. It would seriously disrupt business if such transactions had to be stopped, because several hundred were processed each week by large financing houses. It would be advisable to add such a provision to the Bill in order to have parity between the two reporting requirements.

Discussion
The Acting Chair asked Mr Smit to explain how Clause 12 could be amended to address the inconsistency.

Mr Smit replied that an environment should be established in which institutions felt positive about reporting such matters. This would involve creating protection for both legal liability as well as physical safety by ensuring anonymity. When this provision was inserted into the FIC Act concern was raised that the provision of anonymity meant that the person could not be compelled to testify at the potential trial, and this would thus seriously hamper any successful prosecution. He stated that this had, however, not proven to be a problem to date as the reporting tended to be merely a tip off that set in motion a much more comprehensive investigation process.

Mr D Worth (DA) [Free State] questioned whether the term 'Republic' should not be expressly defined as being the Republic of South Africa, to avoid any confusion.

Dr Jacobs replied that the South African Interpretations Act stipulated that the term 'Republic' when used in South African legislation would refer to the Republic of South Africa.

Mr Worth asked when the amendments proposed by Standard Bank would be included in the Bill.

Dr Jacobs responded that this could be incorporated by Friday, 29 October.

The Acting Chair stated that the amendments were primarily aimed at cleaning up the document, and were not really substantive issues.

Adv G Nel, Legal Advisor: National Prosecuting Authority (NPA), referred to the proposed amendment to Clause 28(2) and stated that Section 12(2) related only to the offence. The question then arose whether a duty was still placed on the person to report within the three months and, if such a duty existed, there would be no authority to report to because the Commissioner was only required to publish directions relating to such reporting after three months after the Act commenced. He proposed that the proposed Clause 28(2) be amended to stipulate "Section 12" and not merely "Section 12(2)".

Dr Jacobs agreed with Adv Nel. He stated further that the Bill was scheduled to be debated in the NCOP on 16 November 2004, and that the National Assembly would be rising on 17 November 2004. This would leave no time to brief the Portfolio Committee on the Bill passed by the NCOP, and the Bill would then not be fully dealt with. The Minister required the Bill to be finalised in this present session, and Dr Jacobs requested the Committee to expedite the processing of the Bill. He stated that the Department would be available to assist in the passing of the Bill in this session.

The Acting Chair agreed, and stated that the possibility of finalising the Bill next week would be considered.

The meeting was adjourned.

Appendix : Standard Bank Submission

STANDARD BANK SUBMISSION

Protection of Constitutional Democracy Against Terrorist and Related Activities Bill B 12
- 2003 ("PROCDATRA") : Request to raise concerns at the Select Committee meeting to
be held on 27 October 2004

The Standard Bank of South Africa Limited (Standard Bank) would like to emphasise its support
for the aims of the Department of Security and Constitutional Affairs as set out in PROCDATRA.
We are mindful of the dangers and threats to the fabric of our society and national security that
terrorism and related activities present. We also appreciate the effort that has been made by the
many stakeholders to publish PROCDATRA in its current form.

We would like however, to raise some matters that have arisen after due consideration of
PROCDATRA.

In this respect, we have previously endorsed the comments submitted by Professor Louis de Koker on
behalf of Rand Afrikaans University's Centre for the Study of Economic Crime.

We have also recently been made aware that the Select Committee for the Department of
Security and Constitutional Affairs is meeting on the 27th October 2004 to discuss PROCDATRA.
In the absence of an invitation to participate in the debate we offer the following for your
consideration.

Our concerns are as follows: -

1. Definition of "knowledge"
The definition of "knowledge" as contained in clause 1(6) of PROCDATRA is of particular concern and, in its current form, will be difficult if not impossible to implement.

As the clause currently stands, a person will have knowledge of a fact if: -

- The person has actual knowledge of that fact (no concerns here)',

- The person fails to obtain information to confirm or refute the existence of that fact (for every transaction that a bank undertakes it would have to obtain information as to whether such transaction was terrorist financing or not. Failure to obtain such information would render the person concerned as having knowledge that the transaction involved terrorist financing); or

- The person believes that there is a reasonable possibility of that fact (this equates suspicion with knowledge)

We find it difficult to contemplate that the drafters of the Bill in fact intended this outcome. We therefore respectfully request that the above definition be replaced with the definition for "knowledge" as contained in the Prevention or Organised Crime Act No. 121 of 1998 ("POCA"), which definition is workable and effective.

2. Lack of consistency of definitions
As a general comment we would like to point out that it would be helpful if the definitions contained in PROCDATRA, POCA and the Financial Intelligence Centre Act No. 38 of 2001 ("FICA") were consistent.

3. Failure to incorporate a suitable defence for persons that report suspected terrorist activity to the Financial Intelligence Centre ("FIC")
According to the proposed amendments to Section 29 of FICA there will be a duty to report knowledge or suspicion of offences relating to the financing of terrorist and related activities to the FIC. This extends the current reporting requirement, which only pertains to knowledge or suspicions of money laundering offences.

However, it is noted that Section 7A of POCA contains a valid defence from prosecution for persons who report money laundering offences to the FIC. There does not appear to be a concomitant defence provided for as regards the reporting of terrorist financing offences to the FIC. This would potentially result in the ineffectiveness of the reporting requirement for terrorist financing as persons who either have knowledge or suspicion relating to terrorist financing may want to report in terms of the law but may be reluctant to do so for fear of prosecution. It is respectfully suggested that an appropriate defence clause be inserted.

4. Potential loss of anonymity in reporting terrorist financing
The law appears to contain a dual reporting obligation in terms of terrorist financing.Reporting is required both to the FIC (in terms of Section 29 of FICA) and to a police official (in terms of Section 12 of PROCDATRA).

While the identity of the person reporting the knowledge or suspicion of terrorist financing is protected in terms of FICA, there does not appear to be any similar protection of identity for the person who is required to report to the police official under PROCDATRA. This may result in an ineffective reporting obligation, as while the person may want to report in terms of PROCDATRA they may be reluctant to do so for fear of reprisal.

It is respectfully submitted that the dual reporting obligation be removed and that the sole reporting obligation for terrorist financing offences be to the FIC in terms of the proposed amendments to FICA. The FIC would then be responsible for communicating with law enforcement. The elimination of the dual reporting would also facilitate in synergising the reporting process.

5. Reporting of transactions that are "unnecessarily complex" or transactions that "form part of an unusual pattern of transactions"
These additional reporting requirements as contained in the proposed amendments to Section 29 of FICA are potentially going to be very difficult to implement practically, and to train staff to identify. Transactions may be complex for a number of reasons, most of which may well be legitimate. In the absence of a clear definition of what an "unnecessarily complex transaction" is, it will be problematic, if not impossible to
implement.

It is unclear as to how the identification and reporting of "unnecessarily complex" transactions and those that "form part of an unusual pattern of transactions" will assist in the combating of terrorist financing. It is furthermore submitted that the current wording of Section 29 of FICA sufficiently provides for the detection and
reporting of suspicious activity.

We respectfully recommend that these additional reporting requirements be removed from the proposed amendments to FICA.

6. No provision for the continuation of transactions when terrorist financing is suspected
It is noted that PROCDATRA makes no provision for the continuation of a transaction in the event of terrorist financing being suspected. This would result in a person having to terminate any transaction where there was a suspicion of terrorist financing activity. The consequences of this action would potentially be two-fold: -

- A client guilty of terrorist financing could be inadvertently tipped off and as a result take evasive action; alternatively

- A potentially innocent client could be severely prejudiced on the basis of a mere suspicion.

It is respectfully suggested that a clause be inserted into PROCDATRA that will provide for the continuation of a transaction where there is a suspicion of terrorist financing provided that a subsequent report is filed with the FIC.

We trust that our concerns will be received in the constructive spirit intended, and we would welcome the opportunity to discuss our suggestions with your Department when convenient to yourselves.

Yours faithfully

P L van der Merwe
Senior Manager, Group Compliance

Audio

No related

Documents

No related documents

Present

  • We don't have attendance info for this committee meeting

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: