Financial Crime World

Title: South Africa’s President Signs New Laws to Bolster Anti-Money Laundering and Terrorism Financing Defenses

President Ramaphosa Enacts Two New Laws

  • General Laws (Anti-Money Laundering and Combatting Terrorism Financing) Amendment Act
  • Protection of Constitutional Democracy Against Terrorism and Related Activities Amendment Act

Strengthening South Africa’s Anti-Money Laundering and Counter-Terrorism Financing Regulations

President Cyril Ramaphosa of South Africa has recently signed into law two acts: the General Laws (Anti-Money Laundering and Combatting Terrorism Financing) Amendment Act and the Protection of Constitutional Democracy Against Terrorism and Related Activities Amendment Act. These legislative changes aim to strengthen South Africa’s systems for combatting money laundering and terrorism financing.

National Treasury’s Response

The National Treasury welcomed the enactment of these laws, emphasizing their role in combatting corruption, fraud, and terrorism. Furthermore, these new laws will assist South Africa in meeting international standards set by the Financial Action Task Force (FATF) on anti-money laundering and counter-terrorism financing.

Responding to FATF’s Mutual Evaluation Report

The FATF’s mutual evaluation report in October 2021 identified several deficiencies in South Africa’s anti-money laundering and counter-terrorism financing regulations. In response, the South African government has been working diligently to address these issues by amending six key laws:

  1. Trust Property Control Act
  2. Nonprofit Organisations Act
  3. Financial Intelligence Centre Act
  4. Companies Act
  5. Financial Sector Regulation Act

These legislative changes aim to improve transparency and enhance regulatory oversight.

Effective Dates and Key Provisions

  • Protection of Constitutional Democracy Against Terrorism and Related Activities Amendment Act: Effective from February 4, 2023, this Act strengthens the country’s constitutional democracy terrorism law by expanding its provisions to include cyber-terrorism.
  • General Laws (Anti-Money Laundering and Combatting Terrorism Financing) Amendment Act: This Act targets various acts and goes into effect on various dates starting from January 4, 2023. It will help establish a comprehensive mechanism to bring transparency to beneficiary ownership of trusts and corporations as per the revised Trust Property Control Act and Companies Act.

Progress Towards FATF Compliance

Overall, these new laws tackle 15 of the 20 deficiencies in South Africa’s legal framework related to the 40 FATF recommendations identified in the mutual evaluation report. The remaining deficiencies are expected to be addressed through non-statutory measures. South African authorities have also completed a second round of risk assessments for money laundering, terrorist financing, and proliferation financing, as well as developing a national strategy to address these risks and issuing guidance to enhance compliance.

Engagement with FATF

South African representatives will engage with the FATF Joint Group in a face-to-face meeting in Rabat, Morocco, on January 13, 2023, to discuss the progress made in addressing the deficiencies identified in the mutual evaluation report and respond to any further questions from the FATF Joint Group before the FATF’s International Cooperation Review Group makes its final recommendation to the FATF Plenary at its February 2023 meeting.