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SA off the hook over FICA delays - for now

Cape Town – South Africa was let off the hook for the time being when the Financial Action Task Force (FATF) decided not to publicly rebuke the country for failure to sign into law amendments to the Financial Intelligence Centre Act (FICA). 

At its plenary meeting held in Paris from 22 to 24 February the international body that monitors compliance with anti-terrorism and anti money-laundering regulations deferred a decision to issue a public statement on South Africa’s compliance with standards against money laundering and terrorist funding until its next meeting in June. 

The plenary considered the FATF’s 12th Mutual Evaluation Follow-up Report on South Africa’s process to remedy deficiencies identified in the 2009 mutual evaluation. 

These deficiencies relate to gaps in legislation on adequate customer due diligence and record-keeping measures. These are considered serious deficiencies and are addressed in the FIC Amendment Bill. On the agenda at the plenary was a proposal for the FATF to express its concern at South Africa’s failure to address these deficiencies in the form of a public statement. 

Zuma’s reservations 

In November last year, President Jacob Zuma referred the FICA Bill, which had been passed by Parliament in May already, back to the National Assembly, citing concerns over a provision that pertained to warrantless searches. 

READ: FICA Bill unconstitutional, says Zuma 

Parliament’s standing committee on finance after another round of public hearings passed the Bill on Tuesday February 21. It will be debated in the National Assembly on Tuesday and referred back to President Jacob Zuma who has one of two choices - either sign it into law, or refer it to the Constitutional Court to ascertain if it passes constitutional muster. 

On Monday, National Treasury and the Financial Intelligence Centre (FIC) welcomed the FATF’s decision to delay the public statement, which has the potential to tarnish South Africa’s reputation as a country with sound financial institutions and harm South African banks’ relationship with the international banking community. 

SA’s motivation for FICA Bill delay 

National Treasury deputy director-general Ismael Momoniat as well as the banking fraternity have warned on a number of occasions that a delay in signing the FICA Bill into law could render South Africa non-compliant with international standards and regulations.

READ: SA faces dire consequences if FICA Bill not signed - Treasury

Momoniat was part of the South African delegation present at the plenary in Paris, where the FATF was requested to defer its public statement. 

The delegation motivated the delay in the signing of the FICA Bill into law, saying the process which the President followed in referring his reservations on the constitutionality of the relevant clause back to the National Assembly is provided for in South Africa’s Constitution and is therefore consistent with legislative processes. 

The delegation added that the issue which caused the President to refer the Amendment Bill back to the National Assembly does not relate to the matters which South Africa had to address in the course of the follow-up process and therefore in no way reflects a lack of political commitment to address these deficiencies. 

The FATF will again consider the decision as to whether a public statement should be issued or not at its next Plenary meeting which is due to take place from 21 to 23 June 2017 when it will next consider South Africa’s progress in remedying the deficiencies identified in the 2009 mutual evaluation.

Back on Zuma’s desk 

Yunus Carrim (ANC), chairperson of Parliament’s standing committee on finance said the committee adequately dealt with Zuma’s reservations about warrantless searches in its deliberations. 

READ: Heated public hearings into FICA Bill 

Although the committee could choose to return the Bill as it had been passed in May 2016, Carrim said the committee clarified a number of matters, among others that FIC inspectors will not carry out searches that lead to criminal prosecutions, and will only be concerned with compliance with the FIC Act. 

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