On 19 December 2024, the National Treasury published for public comment, the draft General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill, 2024 (“Draft Amendment Bill”). A copy of the Draft Amendment Bill can be accessed here
The Draft Amendment Bill proposes amendments to the following legislation:
- the Financial Intelligence Centre Act, 2001 (“FICA”);
- the Financial Sector Regulation Act, 2017 (“FSR Act”);
- the Companies Act, 2008 (“Companies Act”); and
- the Nonprofit Organisations Act, 1997.
The aim with these amendments is to address deficiencies identified by the Financial Action Task Force ("FATF") in South Africa’s Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) system, in order to assist with South Africa’s exit from the FATF greylist, whilst also preparing South Africa for the next mutual FATF evaluation to be conducted in 2026/27.
The Draft Amendment Bill proposes the following notable amendments:
1. Companies Act
a. Amendment to section 82 of the Companies Act
The proposed amendment will require the Companies and Intellectual Property Commission (“CIPC”) to deregister a company (or close corporation) if it fails to submit a securities register or beneficial interest register annually, as prescribed in section 33 of the Companies Act;
b. Amendment to sections 171 and 175 of the Companies Act
The proposed amendment will authorise the CIPC to impose administrative fines on a person who fails to comply with a compliance notice issued to that person in respect of failure to submit the securities register or the register of beneficial interest which fines does not exceed the greater of: (i) 10% of the company’s turnover for the period during which the company failed to comply with the compliance notice; and (ii) the maximum amount to be prescribed in a regulation which amount must be not less than R10 million; and
c. Insertion of a new section 175A of the Companies Act
The proposed insertion will afford a person which is subject to an administrative fine for a failure to comply with a compliance notice issued for failure to submit the securities register or the register of beneficial interest, the right to apply to the Companies Tribunal for a review of such administrative fine. It is proposed that the Companies Tribunal may confirm, modify or set aside such administrative fine, and that the Companies Tribunal’s decision be binding, only subject to any right of review by, or appeal to, a court.
2. FSR Act
a. Amendment to section 2 of the FSR Act
The proposed amendment will amend the existing definition of when a person “makes a financial investment” for the purposes of subsection (2)(b)(ii), by broadening the definition to include, amongst others, an investor that gives a contribution of economic value (as opposed to merely a contribution in money or money’s worth), irrespective of whether the investor has day-to-day control over the use of the contribution;
b. Amendment to section 3 of the FSR Act
The proposed amendment will amend the existing definition of “financial services” to expand the circumstances under which services may be designated as a financial service, to include arrangements that are similar in nature or have similar outcomes as financial products and services already delineated therein. The memorandum explaining the objects of the Draft Amendment Bill (“Memorandum”) states that such amendment will enable the Minister of Finance to identify and assess the money laundering and terrorist financing risks that may arise in relation to the development of new products and new business practices, including new delivery mechanisms, and the use of new or developing technologies for both new and pre-existing products, and if required to designate new financial products or services to be regulated to ensure that regulation keeps abreast with the development of new financial products and services, innovation and technology; and
c. Amendment to sections 111 and 113 of the FSR Act
The amendment will authorise the responsible authority to require financial institutions, through the issuing of a standard, to be licensed in terms of the FSR Act, in addition to a requirement to be licensed in terms of a specific financial sector law, the National Credit Act 34 of 2005 or the National Payment System Act 78 of 1998. It is noted in the Memorandum, that the amendment to sections 111 and 113 of the FSR Act is required to ensure that the responsible authority may execute its mandate appropriately and that a ‘competent authority’ as envisaged in FATF Recommendation 15 is able to impose anti-money laundering requirements.
3. FICA
a. Amendment to sections 28A of FICA
It is proposed that section 28A be deleted in its entirety and replaced with a new section 28A in terms whereof accountable institutions must report if they have in their possession or under their control, property owned or controlled by or on behalf of, or at the direction of, a person or entity sanctioned by the UN Security Council;
b. Amendment to sections 42 of FICA
The proposed amendment requires accountable institutions to take into account the risk that new delivery mechanisms and the use of new or developing technologies, may involve or facilitate money laundering activities, the financing of terrorist and related activities or proliferation financing activities. In addition, the proposed amendments require accountable institutions to inform the Financial Intelligence Centre and the relevant supervisory body of such additional measures; and
c. Amendment to sections 46 of FICA
It is proposed that an accountable institution that performs any act to give effect to a business relationship or single transaction in contravention of section 20A is non-compliant and is subject to administrative sanctions. Section 20A provides that accountable institutions are not allowed to establish a business relationship with an anonymous client, complete a single transaction with an anonymous client, or complete a transaction with a client who has a false or fictitious name.
4. Nonprofit Organisations Act, 1997
a. Amendment to section 30 of the Nonprofit Organisations Act, 1997
In terms of the proposed amendment the maximum amount of the fine and years of imprisonment in respect of an offence in terms of the Nonprofit Organisations Act, 1997 be a fine not exceeding R1 million or to imprisonment not exceeding 5 (five) years or to both a fine and imprisonment.
Interested parties are invited to submit their written comments to the National Treasury at Commentdraftlegislation@treasury.gov.za by close of business on 6 February 2025.
Upon the receipt of written comments, the National Treasury, in collaboration with the Department of Social Development and the Department of Trade, Industry and Competition will engage with stakeholders on selected issues through public workshops. Thereafter, the revised Draft Amendment Bill will be presented to Cabinet for consideration and eventually, for tabling in Parliament.
For more information on the amendments, and practical implications of the amendments, please reach out to Clyde & Co’s Corporate and Regulatory team.
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