From CompliNEWS | Financial Service Intelligence Watch
National Assembly adopts money laundering prevention Bill; Companies Bill, NPO Bill, Trusts Bill, FIC Bill
The estimated date (PMG) when the National Council of Provinces may vote and approve the General Laws Amendment (Anti-Money Laundering and Combating Terrorism Financing) Bill is around 10 December 2022.
The National Assembly has adopted the Bill to fight money laundering that has been rushed through Parliament as the government races to avoid greylisting by the international Financial Action Task Force. A Business Day report says the General Laws (Anti Money Laundering & Combating Terrorism Financing) Amendment Bill was last week approved by all parties, except for the IFP – though other parties criticised the rushed process and the Bill’s impact on non-profit organisations. The Bill will now be sent to the NCOP. The Select Committee on Finance has already begun processing the Bill in the NCOP so that it can be passed by both houses before the December recess. Chairperson of the Standing Committee on Finance, Joe Maswanganyi, said a socio-economic impact study should have been conducted to evaluate the costs and benefits of the Bill, as was the case with all legislation. This requirement was waived for the Bill given its urgency. Finance Minister Enoch Godongwana insisted in his closing remarks at the end of the debate that the Treasury has not steam-rollered the legislation through Parliament. The conditions were not of the Treasury’s choosing and political parties need to bury their differences in the national interest, he said.
The Bill is currently making its way through the National Council of Provinces.
The Companies Act: General Laws (Anti-money Laundering and Combatting Terrorism Financing) Amendment Bill proposes that a person also be disqualified to be a director of a company if convicted of an offence under the Tax Administration Act; involving money laundering, terrorist financing, or proliferation financing activities as defined in section 1(1) of the Financial Intelligence Centre Act; or under the Protection of Constitutional Democracy Against Terrorism and Related Activities Act.
Note: The Bill will also define ‘beneficial owner’; and require a copy of the company’s securities register (to be amended) and a copy of the register of the disclosure of beneficial interest and beneficial ownership (to be amended), where relevant, in the annual return – also see fundamental transactions required disclosures.
The Non-profit Organisations Act: General Laws (Anti-money Laundering and Combatting Terrorism Financing) Amendment Bill proposes setting out grounds for disqualification of an office-bearer of a registered NPO such as being convicted under the Tax Administration Act (considered with potentially relevant laws such as section 18A(7) of the Income Tax Act); the Financial Intelligence Centre Act (for example section 29 suspicious and unusual transactions); or Chapter 2 of the Prevention and Combating of Corrupt Activities Act.
The Bill proposes a NPO must be registered if it makes donations to individuals or organisations outside of the Republic’s borders; or provides humanitarian, charitable, religious, educational or cultural services outside of the Republic’s borders; and proposes limited refusal of registration grounds and limited cancellation grounds.
The Bill proposes requiring prescribed information about the office-bearers, control structure, governance, management, administration and operations of registered non-profit organisations.
The Trust Property Control Act: General Laws (Anti-money Laundering and Combatting Terrorism Financing) Amendment Bill proposes a register of persons disqualified from being trustees with grounds of disqualification such as convicted under the Companies Act (consider eg section 214 reckless conduct and non-compliance) or for fraud, misrepresentation or dishonesty, money laundering, terrorist financing or proliferation financing.
The Bill further proposes a trustee must disclose their position as trustee to any accountable institution with which the trustee engages in that capacity and must make it known to the institution that the transaction or business relationship relates to trust property – failure to do so will be an offence.
The Bill also proposes a trustee must record prescribed details of accountable institutions used as agents to perform any trustee functions relating to trust property (Functions), and from which the trustee obtains any services in respect of the Functions – failure to do so will be an offence.
The Bill also proposes a trustee must record prescribed details of beneficial owners of the trust.
The Financial Intelligence Centre: General Laws (Anti-money Laundering and Combatting Terrorism Financing) Amendment Bill proposes, amongst others:
Suspicious and unusual transactions duties that apply to all business (section 29 reporting)
Sections 52 and 57 administrative sanctions for failure to make a section 29 report or section 32 additional report timeously, or for section 64 conducting transactions to avoid reporting duties.
Prominent influential person
That a prominent influential person, as referenced in sections 21G, 21H, 42, and 79C, is an individual who holds, or held at any time in the preceding 12 months, the position of chairperson of the board; chairperson of the audit committee; executive officer; or chief financial officer, of a threshold company.
Note: A company will be a threshold company if it provides goods or services to an organ of state and the annual transactional value of the goods and/or services exceeds an amount to be determined by Gazette.
Final note: References to domestic and foreign politically exposed persons, will also be updated in sections 1; 21F; 21G; 21H; 42; 79A and 79B and Schedules 3A and 3B.
Accountable institutions ongoing due diligence
If an accountable institution suspects a suspicious or unusual transaction or activity, and reasonably believes customer due diligence will disclose to the client that a section 29 report will be made, it may discontinue the due diligence and consider making a section 29 report.
An accountable institution that fails to comply with a monitoring order will be subject to and administrative sanction, in addition to committing an offence.
Defining proliferation financing as an activity likely to have the effect of providing property, a financial or other service or economic support to a non-State actor, that may be used to finance the manufacture, acquisition, possessing, development, transport, transfer or use of nuclear, chemical or biological weapons and their means of delivery – also see section 3 and section 27A.
Includes an activity that contravenes a UN Security Council identified person or entity prohibition.
Redefining beneficial owner as a natural person who directly or indirectly ultimately owns or exercises effective control of a client of an accountable institution or of a legal person, partnership or trust that owns or exercises effective control of, as the case may be, a client of an accountable institution.
The definition will also include a natural person who directly or indirectly exercises control of a client of an accountable institution on whose behalf a transaction is being conducted.
This definition will also include, in respect of legal persons, partnerships and trusts, each natural person as contemplated in section 21B.