Cape Town - The ANC-led government was criticised on Tuesday for rushing the anti-money laundering amendment bill so that South Africa could avoid being “grey listed” by the Financial Action Task Force (FATF).
This as the General Laws Amendment Bill (GLAB), designed to combat money laundering and terrorism financing, was passed in the National Assembly.
In 2019, the FATF conducted a peer review and produced a mutual evaluation report which found South Africa had not complied with 20 of the 40 standards of the global regulator.
This led to the country being placed under International Cooperation Review Group observation for a period of one year, which ended in October.
When a country is added to the grey list, it means that it is under increased monitoring by the FATF, according to Dr Celeste Campher, a lecturer in the Department of Economics & Finance at the University of the Free State.
She said a grey listed country is one with strategic deficiencies in its systems to counter financial crimes.
South Africa will then be deemed as a high-risk jurisdiction to transact with, and the FATF will require additional steps for investors who want to conduct business with the country.
For the banking industry the grey-listing implies that banks will need to spend more money on managing correspondent banking relationships and on relationships with global infrastructure providers in South Africa.
During a debate on the General Laws Amendment Bill, DA MP Dion George said the government did nothing to fix the deficiencies because the hopelessly corrupt administration was guilty of crimes and that President Cyril Ramaphosa moved illicit cash across the borders.
“When the government woke up to reality, it scrambled to amend various laws,” George said.
He said there was more than enough time for legislation to be sensibly amended, but that time was wasted.
“There is no guarantee that passing this legislation will be enough to satisfy FATF.
The fundamental problem lies with prosecution of perpetrators of these financial crimes and no amount of legislation can fix systemic corruption or generate political will to act,” George said.
He said though his party supported amendments identified in the legislation, it did not support the amendment to the Non Profit Organisation Act that required registration of NPOs that received money from and sent money to foreign sources.
The ACDP’s Steve Swart took a swipe at the National Treasury for taking less than a year to prepare the bill for Parliament and Parliament having weeks to adopt it.
“The bill appears to be an attempt to include just what was needed for FATF approval without recognition of the need to respond to the unique circumstances of the country, particularly the NPO sector.
“A previous legislative attempt to require mandatory registration was withdrawn because of resistance from the non-profit sector, yet that was the system Treasury has chosen for this bill.
It seems as if Treasury was drafting in a vacuum,” Swart said.
Finance Minister Enoch Godongwana said there was no attempt on their part to steamroll the process of amending the bill.
Godongwana said it was conditions that were not their own choosing, which necessitated the speed with which the legislation was passed.
He said when the findings of the FATF evaluation were made in October last year, they had to identify different pieces of legislation that needed to be amended.
“That, on its own, was a process,” he said. Godongwana said the issue of the registration of NPOs was something that could be still discussed.
He said that “grey-listing was about the interest of South Africa in general, which cut across the political divide”.
Cape Times