Finance Minister Malusi Gigaba has signed and gazetted the Financial Intelligence Centre Amendment Act (Fica) just in the nick of time.
The commencement of the Act means South Africa has likely avoided being deemed noncompliant with the international standards of the global financial crime monitor, the Financial Action Task Force, which would have had severe implications for the banking sector.
Treasury officials will meet the task force next week to report on progress in strengthening the prevention and punishment of financial crimes.
Delays in signing the amendments into law had caused anxiety in the banking sector, civil society and political opposition parties. Nongovernmental organisation Corruption Watch last week wrote to Gigaba requesting an indication of when the Act would be signed. Its executive director, David Lewis, said being marked as noncompliant was tantamount to a downgrade.
On Tuesday – after Gigaba had been summoned to meet ANC leaders – treasury announced he had signed and gazetted the Act.
The new measures will, among other things, make Fica compliance easier for low-risk customers but will increase attentiveness to the transactions of potentially higher-risk customers dubbed in the Act as prominent influential persons.
The head of tax and financial sector policy at the treasury, Ismail Momoniat, said in a radio interview that, although large banks already tended to be vigilant, in line with their global obligations, the Act would now force smaller players in the banking sector to do the same.
Smaller banks registered in South Africa include Ubank, South African Bank of Athens, Albaraka Bank, Bank of Baroda and Habib Overseas Bank, which was fined R1-million by the Reserve Bank for inadequate controls and methods in reporting suspicious transactions.
Treasury said various provisions of the Act would start on different dates. The first set of provisions commenced on Tuesday, because they did not require changes to existing regulations, exemptions or internal systems of institutions.
The second set of provisions will start on October 2 and give effect to new concepts and approaches that will require changes to regulations and exemptions, as well as system changes and staff training.
The Democratic Alliance spokesperson on finance, David Maynier, has warned that deciding on a threshold amount and generating a database of prominent influential persons could mean “undue delay or even an indefinite delay, in implementing the (…) Act”.
“Moreover, an ‘interdepartmental forum’, which is not provided for in the legislation, and for which there is no authority in law, will be established,” said Maynier, noting “there is a real risk that it may be dominated by the security cluster … who are desperate to get control of the Financial Intelligence Centre.”
The parliamentary standing committee on finance has resolved to assess the progress in implementation of the Fica Act regularly.