Crib Notes: Everything you need to know about the FIC Amendment Bill

For a piece of paper, the Financial Intelligence Centre (FIC) Amendment Bill has had a lot of accusations thrown its way. It is supposedly anti-black and might make the ANC broke, but its supporters are urging President Jacob Zuma to sign the Bill into law to prevent financial crime. So what’s all the fuss really about?

Amendment Bill for who?
The Bill, which was tabled by Treasury in Parliament in April 2015, has little effect on everyday consumers, but it will affect accountable institutions such as estate agents, banks, foreign exchange service providers, trusts, attorneys and others.

The bill may not affect you directly, but it most likely affects your bank.

Why is there an amendment Bill?
South Africa is a member of the Financial Action Task Force (FATF), an international body that works with financial institutions to combat financial crime.
It was after South Africa joined the FATF in 2003 that the state adopted the Financial Intelligence Centre Act (Fica), which regulates financial institutions.

But the Fica Act isn’t up to scratch regarding the FATF’s standards (yes, we’re below par), which is why we have the amendment Bill.

What the fic is the Bill?
Essentially, it’s a piece of legislation that the treasury has introduced to tighten the rope around money laundering, illegal financial transactions across borders and the financing of terrorism.

So what’s the problem with it? We’ll get to that in a moment.

What is the Bill asking for?
Some of the main proposals in the Bill are that institutions must take more due diligence regarding their clients and that the highest levels of management are accountable for anything shady.

Here are some of the proposed changes to watch out for:

Client due diligence
What was known as “politically exposed persons” (PEPs) will now be altered to “foreign prominent public officials” and “domestic prominent influential persons”. Internationally, there’s a whole lot of emphasis on due diligence when it comes to people who are influential and prominent – including those in the private sector – but this hasn’t always been the case in South Africa.

The Bill says accountable institutions must assess whether these people present a higher risk to the institution. Transactions must also be monitored on an ongoing basis.

Risk management and compliance programme
This states that accountable institutions must assess areas of their business that open up the risk of money laundering or financing terrorism. Steps must be taken to mitigate risky areas so that financial crimes are prevented.

Director duties
People in the highest levels of management will be held accountable for anything that goes wrong. The board of directors, senior management or anyone else with the most authority will take the fall if the institution doesn’t comply with the Fica Bill.

Why hasn’t Zuma signed the Bill?
President Jacob Zuma was meant to sign the Bill before July 30 last year after it was passed by Parliament, but in November he sent it back to the House for review. Zuma said he was concerned that the Bill is unconstitutional, because certain provisions, he said, allowed for warrantless searches.

“I have given consideration to the Bill in its entirety and certain submissions regarding the constitutionality of the Bill. After consideration of the Bill and having applied my mind to it, I am of the view that certain provisions of the Bill do not pass constitutional muster,” he said. 

But two senior counsel members have ruled out Zuma’s concerns. Advocate Ishmael Semenya made a submission in Parliament on behalf of the standing committee on finance earlier this week.

“We have concluded that the proposed section in the Bill ... is consistent with the Constitution,” Semenya said. 

Advocate Jeremy Gauntlett, who represented treasury, said the president’s concerns are “not sound”. 

Who else wants to kill the Bill?
The security cluster said earlier this week that the Bill is encroaching on their territory by allowing the FIC to have powers that are normally reserved for the South African Police Service (SAPS) or the State Security Agency.

“The investigating of crimes is the constitutional and legal mandate of the SAPS and the gathering, correlating and analysing of intelligence falls within the constitutional and legal mandates of the various intelligence agencies,” the cluster said. 

The Black Business Council (BBC), a body that represents black professionals, made a submission to Parliament on the same day, saying the Bill would affect black people more than anyone else.

BBC president Danisa Baloyi argued that banks have already begun shutting down bank accounts owned by BBC members without giving reasons.

“Banks are not in the net … Who is going to police the banks?” Baloyi was quoted in the Daily Maverick as saying. 

“We don’t know if other race groups are having the same problems … South Africa is still battling with economic transformation … Radical economic transformation as pronounced by this government will not happen as long as there are barriers like this [the Bill].”

Progressive Professionals Forum (PPF) president Mzwanele Manyi argued similar points to Baloyi’s, while also saying the Bill would badly affect the ANC and those affiliated with it. The PPF is allied to the ANC.

The Gupta-owned television channel ANN7 has said it does not support the Bill, raising concerns that it may be one of those things the family has allegedly captured.

Who likes the Bill?
The treasury, which brought the bill to Parliament, backs it. Yunus Carrim, an ANC MP who heads up the standing committee on finance, has also urged Zuma to sign the Bill.

“Parliament is not going to tremble and buckle just because the president’s lawyers said it’s unconstitutional. If the presidency’s lawyers are wrong, they’re wrong,” Carrim said in December last year.

Banking Association of South Africa managing director Cas Coovadia has also said that Zuma must sign the Bill urgently and that it does not violate the Constitution. The Economic Freedom Fighters (EFF) endorsed the Bill in a statement the party issued. 

The political wars being fought

During the public hearings in Parliament earlier this week, EFF MP Floyd Shivambu accused the Guptas of influencing the decision to pass the Bill.

“But then the Saxonwold platforms and editorials in The [Gupta-owned] New Age [newspaper] argue that the Bill must not be passed. So just before Parliament closes, the president decides to bring back that Bill to be entertained. It frustrates the efforts to fight financial crimes,” Shivambu said.

The FIC’s current relationship with the Guptas is worth noting. The FIC revealed in an affidavit 72 “suspicious” transactions linked to the Gupta family. The affidavit was filed in a court application made by Finance Minister Pravin Gordhan last year. 

From Sars wars to rumours of a Cabinet reshuffle (read: finance minister reshuffle), the battle between the presidency and treasury has grown on many fronts. The Bill may just be the latest development – after it all it was a Bill first brought to Parliament by former finance minister Nhlanhla Nene.