Financial Crime World

South Africa Strengthens Anti-Money Laundering and Combating Terrorism Financing Laws

President Cyril Ramaphosa has signed into law two key Acts aimed at bolstering the country’s anti-money laundering (AML) and combating terrorism financing (CFT) regime. The General Laws Amendment Act and the Prevention of Organised Crime Amendment Act, 2022 bring significant reforms to the laws governing money laundering, terrorist financing, and proliferation financing.

Addressing FATF Deficiencies

The amendments address 15 out of the 20 deficiencies identified by the Financial Action Task Force (FATF) in its mutual evaluation report of South Africa. The remaining five deficiencies will be addressed through non-statutory initiatives, while the country continues to work on improving the effectiveness of its AML/CFT regime.

Key Highlights of the Amendments

  • Beneficial Ownership Transparency: The amendments establish a comprehensive mechanism for bringing transparency to the beneficial ownership of corporate vehicles such as trusts and companies.
  • Regulatory Framework for Non-Profit Organisations: A new regulatory framework is established to protect non-profit organisations that transfer funds overseas from possible exploitation by facilitators and financiers of terrorist organisations.
  • Fit and Properness Scrutiny: Financial sector regulators are empowered to apply fit and properness scrutiny to the beneficial owners of licensed financial institutions.

Progress on National Strategy

The South African authorities have completed a second round of assessments of money laundering and terrorist financing risks and developed a national strategy to address these. The country’s regulators have also developed policies, issued directives, and guidance to further strengthen aspects of money laundering, terrorist financing, and proliferation financing risk management by financial institutions.

Next Steps with the FATF

Following the conclusion of the mutual evaluation report by the FATF in October 2021, South Africa is required to report back on the progress made in addressing the deficiencies identified. A Post Observation Period Report was submitted to the FATF Joint Group, which responded with preliminary analysis/comments on December 16, 2022. The next step is a face-to-face meeting with the FATF Joint Group in Rabat, Morocco on January 13, 2023.

The South African delegation will engage with the FATF Joint Group and respond to any further queries, presenting progress made in addressing the deficiencies identified in the mutual evaluation report.