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12 Jan 2023
BY Angela Itzikowitz , Era Gunning AND Amelia Warren

New year, new laws: South Africa amends its money laundering and counter-terrorist financing regime

On 22 and 23 December 2022, President Ramaphosa signed two key pieces of legislation into law – the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act, 2022 (“General Laws Amendment Act”) and the Protection of Constitutional Democracy Against Terrorism and Related Activities Amendment Act (“POCDATARA Amendment Act”) (“the Acts”).

These Acts represent a significant step towards addressing deficiencies in South Africa’s anti-money laundering and counter-terrorist financing regime, which were identified by the Financial Action Task Force in its 2021 Mutual Evaluation Report.

The Acts follow the recent amendments made to South African primary anti-money laundering legislation, the Financial Intelligence Centre Act, 2001 (“FICA”), which came into effect on 19 December 2022. The amendments added a significant number of persons to the list of “accountable institutions, detailed in Schedule 1 to FICA. Accountable institutions now include:

  • credit providers, as defined in the National Credit Act, 2005 (“NCA”) (including persons who provide credit but are excluded from the ambit of the NCA due to the fact that their clients are juristic persons who fall above a certain financial threshold or the state);
  • money or value transfer service providers;
  • high-value goods dealers – where a “high-value good” means any item to the value of ZAR100 000 or more; and
  • crypto asset service providers.

Accountable institutions face a range of obligations imposed by FICA, including:

  • the obligation to register as an accountable institution with the Financial Intelligence Centre (“FIC”);
  • formulate and implement a Risk Management and Compliance Programme (“RMCP”);
  • train employees; and
  • conduct ongoing due diligence on clients.

These obligations are expanded upon by the General Laws Amendment Act, which amends five pieces of legislation, including:

  • FICA;
  • the Companies Act, 2008; and
  • the Trust Property Control Act, 1988.

Many of the amendments have already taken effect, including all the amendments to FICA, while other changes will commence on 1 April 2023. The changes to FICA include the broadening of the definition of “politically exposed persons”, expanding the powers of the FIC and increasing the obligations of accountable institutions in respect of their RMCPs.

This year, South Africans will have to grapple with two significant changes to the money laundering and terrorist financing regime. First, new accountable institutions must, without delay, comply with the significant obligations placed on them by FICA, as they are granted no “grace period” by the FIC. Second, existing accountable institutions must re-examine and modify their current policies and procedures, so as to comply with their new obligations in terms of the General Laws Amendment Act.

For the first category, ENSafrica has developed a FICA toolkit (which includes an RMCP template and training) to fast-track compliance. For the second, we offer our services to adapt and tailor RMCPs and other policies, to ensure complete and up-to-date compliance.

Should you require assistance, please contact Angela Itzikowitz and Era Gunning.

Era Gunning

Executive | Banking and Finance

egunning@ENSafrica.com

Angela Itzikowitz

Executive | Banking and Finance

aitzikowitz@ENSafrica.com

Amelia Warren

CLP | Banking and Finance

awarren@ENSafrica.com