The June 30 deadline for banks to verify the identities of all their clients was deferred on Thursday to an array of new cut-off points starting on December 31.
Finance Minister Trevor Manuel said banks would have to confirm the identities of their highest risk clients by year-end. The profile of this category of client would have to be determined by banks themselves.
By May 31 next year, banks would have had to verify the details of at least 50% of their clients, Manuel said.
Reporting on the lowest risk clients was delayed to September 30 2006. This group included people with no more than R25 000 in their accounts at any given stage, and who deposited no more than R5 000 or withdrew a maximum of R15 000 a day.
The reporting requirements, which involved verifying the details of some 17-million bank clients, were envisaged in regulations aimed at curbing money laundering through South African banks.
The changes were adopted after considering more than 50 requests for a postponement. They followed a meeting of the Money Laundering Advisory Council earlier in the day, Manuel said.
But the often-maligned requirement for clients’ residential addresses to be verified alongside their identity documents would not be dropped.
”Mere reliance on ID numbers is clearly inadequate, partly because the issue of ID numbers itself has been the subject of dispute because of theft of blank ID books and so on,” Manuel said.
While it was true that many South Africans had no permanent address, ”we identify that as a challenge that we have to respond to in a variety of ways rather than an obstacle that will see us walking away from compliance”.
Manuel blamed the Banking Council for many of the recent disputes about the regulations.
”The Banking Council… claimed to be speaking on behalf of banks while banks individually have been reporting in as accountable institutions because they would not want to be foul of the law or want their licences called into question.”
The compliance of banks to customer identification requirements varied widely, with some of the smaller institutions 100% compliant and some of the bigger ones ”substantially less so”, the minister said.
Some were dragged ”kicking and screaming”, and others wrongly regarded the regulations as the imposition of a duty they did not previously have.
Manuel said banks accepted the new framework and understood the importance of avoiding a last-minute rush.
”We have to ensure that our decisions are reasonable, rational and enforceable and compliant with what is required of us internationally.
”If anybody still feels the need to kick and scream, we might have to at least kick — we don’t have to scream.”
The maximum penalty for non-compliance was 15 years or R10-million.
According to other deadlines outlined on Thursday, every licensed bank had to supply the South African Reserve Bank with a complete risk framework by July 31.
By October 31, they had to have identified all trusts, partnerships and the top 20% of private and corporate clients — those responsible for the bulk of transactions. They also had to report on progress quarterly.
Brokers and investment managers would have to report by October 31 on the verification of partnerships and trusts and the top 20 percent, by transaction value, of their clients.
The regulations, Manuel said, were aimed at ensuring ”that those who earn their keep by means foul are prevented to use the facilities of the financial services institutions”.
The revised deadlines should be published in the Government Gazette by Friday. — Sapa