During the December holidays Parliament passed the General Laws (Anti-Money Laundering & Combating Terrorism Financing) Amendment Act (“the Amendment Act”) which amends the following Acts:
- The Trust Property Control Act, 1988;
- The Nonprofit Organisations Act, 1997;
- The Financial Intelligence Centre Act, 2001; and
- The Companies Act, 2008
While there appears to have been some confusion surrounding the Amendment Act as there was a withdrawal and a replacement of what appears to be an identical version of it, albeit backdated, it appears that many of the amendments have been made as a consequence to the grey-listing South Africa faces. We confirm that these are the amendments:
The Trust Property Control Act, 1988
This act has been amended by:
- inserting definitions of ‘‘accountable institution’’ and ‘‘beneficial owner’’;
- imposing certain requirements on trustees;
- specifying matters that would disqualify a person from being appointed or continuing to act as a trustee;
- clarifying that a person who was appointed outside the Republic as trustee must be authorised by the Master to act as trustee;
- providing for the removal of a trustee who becomes disqualified to continue to act as a trustee;
- specifying information that must be kept by trustees in relation to beneficial owners in relation to trusts;
- requiring the Master to maintain a register containing information relating to beneficial ownership of trusts, and providing for access to information regarding beneficial ownership; and
- specifying certain offences;
It is clear that the overall intention of the amendments is to prevent the misuse of trusts and ensure that there is adequate, accurate, and timely information on the control of trusts available to the authorities.
Prior to these amendments, there was no requirement of the Masters Office to disclose the ultimate ownership or control of the Trust, the only disclosures made to the masters office were the identity of trustees, founders and specifically named beneficiaries.
The Nonprofit Organisations Act, 1997
This act has been amended by:
- requiring registration of specified nonprofit organisations in terms of the Act;
- enabling the Nonprofit Organisations Directorate, in order to perform its functions, to collaborate, co-operate, co-ordinate and enter into arrangements with other organs of state;
- clarifying the scope of powers of the director in relation to the registration and cancellation of registration of nonprofit organisations, and in respect of the power to require amendments to be effected to the constitution of a nonprofit organization;
- requiring registered nonprofit organisations to submit prescribed information about the office-bearers, control structure, governance, management, administration and operations of nonprofit organisations to the director;
- requiring prescribed information relating to the office-bearers, control structure, governance, management, administration and operations of registered nonprofit organisations to be included in the register that the director must keep, and by providing for access to that information;
- providing for grounds for disqualification for a person to be appointed or continuing to act as an office-bearer of a registered nonprofit organisation;
- providing for the removal of an office-bearer; and
- providing for certain contraventions;
Again, it is apparent that the intention of the majority of these amendments is to prevent the abuse of nonprofit organizations and to encourage further disclosure in respect hereof.
The Financial Intelligence Centre Act, 2001
This Act has been amended by:
- amending the definitions of ‘‘beneficial owner’’, ‘‘domestic prominent influential person’’ and ‘‘foreign prominent public official’’, and inserting a definition of ‘‘prominent influential person’’;
- amending the objectives of the Financial Intelligence Centre (‘‘Centre’’);
- amending the functions of the Centre to include the provision of forensic information;
- empowering the Centre to request information held by other organs of state;
- providing for additional and ongoing due diligence measures, and by amending the process followed when there are doubts about the veracity of information;
- aligning certain provisions and Schedules 3A and 3B to appropriately refer to domestic and foreign ‘‘politically exposed persons’’, as distinct from ‘‘politically influential persons’’, who will be dealt with in a new Schedule 3C;
- amending certain provisions relating to resolutions of the Security Council of the United Nations;
- amending the powers of access by authorised representatives to records of accountable institutions;
- enabling the Centre to renew a direction not to proceed with a transaction;
- providing for the safeguarding of information;
- amending the provisions relating to the disclosure of information to the Centre and access to information by the Centre;
- empowering the Minister to prescribe appropriate requirements relating to the access to personal information to ensure that adequate safeguards are in place as required by section 6(1)(c) of the Protection of Personal Information Act, 2013;
- amending certain provisions relating to the risk management and compliance programme;
- amending the offences provisions to empower the imposition of an administrative sanction;
- amending the provision relating to the amendment by the Minister of Schedule 2;
- amending Schedules 2, 3A and 3B, and by inserting a new Schedule 3C; and
- substituting the index for an arrangement of sections;
In short, these amendments do not substantially change the principles upon which customer due diligence are based but have provided for a stronger regulatory framework.
The Companies Act, 2008
This Act has been amended by:
- inserting definitions of ‘‘affected company’’ and ‘‘beneficial owner’’;
- providing for a comprehensive mechanism through which the Companies and Intellectual Property Commission can keep accurate and updated beneficial ownership information;
- requiring a company to keep a record of a natural person who owns or controls the company in terms of the definition of ‘‘beneficial owner’’, and by providing for specified timelines within which the company must record any changes in this information;
- requiring a company to file a record of any natural person who owns or controls the company in terms the definition of ‘‘beneficial owner’’, with the Commission; and
- specifying that persons who are convicted of offences relating to money laundering, terrorist financing, or proliferation financing activities or are subject to a resolution of the UN Security Council are prohibited from registering as company directors;
Similarly to the majority of amendments made by the Amendment Act, these amendments ensure that the Companies and Intellectual Property Commission (CIPC) can keep accurate and updated beneficial ownership information. The requirement that a company must keep a record of the natural person/s who own/s or control/s the company as a ‘‘beneficial owner’’ and must file this record with the CIPC.
The addition that individuals who have been convicted of offences relating to money laundering, terrorist financing, or proliferation financing activities or are subject to a resolution of the UN Security Council are prohibited from registering as company directors is a welcomed addition.
The Financial Sector Regulation Act, 2017
This Act has been amended by:
- providing that a financial institution, key person, representative or contractor to which a regulator’s directive in terms of Part 2 of Chapter 10 has been issued must comply with the directive; and
- inserting a new Chapter dealing with beneficial owners into the Act, which provides a definition of ‘‘beneficial owner’’, and empowers standards and regulator’s directives to be made in relation to beneficial owners;
It is hoped that these amendments and the implementation hereof will remedy the strategic deficiencies in the regulation of the Financial Sector as had been pointed out by the Financial Action Task Force in October 2021 in its Mutual Evaluation Report.
These steps are an attempt to make investors feel more confident in the security and integrity of their investments in South Africa. The Amendment Act is a reassuring development that shows South Africa’s commitment to subscribe to international standards
