South Africa is intensifying efforts to enhance its Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) measures as part of its mission to exit the Financial Action Task Force (FATF) greylist. Recent legislative proposals reflect the country’s commitment to improving compliance with international standards and closing critical gaps in its regulatory framework.

The Greylist Challenge

In February 2023, South Africa was placed on the FATF greylist due to insufficient measures to combat money laundering, terrorist financing, and proliferation financing. Being on the greylist subjects the country to closer international scrutiny and requires it to address identified deficiencies within specific timeframes.

To date, South Africa has made significant progress, resolving 16 of the 22 identified issues. However, six items remain outstanding, and the National Treasury has proposed additional amendments to address these gaps before the next FATF evaluation.

Draft Amendment Bill: A Strategic Move

The National Treasury, in collaboration with the Department of Trade, Industry and Competition, the Department of Social Development, and the Financial Intelligence Centre, has introduced the draft General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill. This proposal aims to strengthen South Africa’s AML and CTF framework by amending four key pieces of legislation:

1. Financial Intelligence Centre Act, 2001
2. Financial Sector Regulation Act, 2017
3. Companies Act, 2008
4. Nonprofit Organisations Act, 1997

These amendments are designed to align South Africa’s laws with FATF recommendations and address vulnerabilities in its financial systems.

Key Proposed Changes

Nonprofit Organisations Act

1. Offences under the act will carry increased penalties, including fines up to R1 million or imprisonment for up to five years.

Financial Intelligence Centre Act

1. Expanded definition of “authorised officer” to include the Public Procurement Office.
2. Enhanced information sharing between the Financial Intelligence Centre (FIC) and the Public Procurement Office.
3. New requirements for institutions to assess risks posed by emerging technologies and financial products.
4. Sanctions for institutions failing to comply with transaction rules or reporting obligations.
5. Cash conveyance reports must be submitted to the FIC within specified periods.

Companies Act

1. The Companies and Intellectual Property Commission (CIPC) will be empowered to deregister companies that fail to submit required registers for over a year.
2. Penalties for non-compliance with register submissions will be introduced, with the option to appeal through the Companies Tribunal.

Financial Sector Regulation Act

1. The definition of “making a financial investment” will be revised to account for evolving technologies and products.
2. Regulators will have the authority to obtain information from significant and beneficial owners and investigate suspected financial sector violations.
3. Licensing of financial institutions will expand to include those already licensed under other laws.

Public Participation and Feedback

The National Treasury has invited public comment on the proposed amendments. Members of the public and industry stakeholders are encouraged to provide their input by submitting written comments via email to Commentdraftlegislation@treasury.gov.za before the deadline on Thursday, 6 February 2025.

Looking Ahead

These proposed changes signify a pivotal step in South Africa’s journey to enhance its financial systems and meet global standards. By addressing the remaining deficiencies and fostering collaboration between regulators and stakeholders, the country aims to secure its removal from the greylist and bolster trust in its financial sector. Stay informed and engaged to play a part in shaping a more secure and resilient financial future.

Ruan de Jonge

Compliance Officer & Content Developer