Cape Town – The Financial Intelligence Centre (FIC) Amendment Bill has been the subject of considerable controversy in the past few months.
Since it landed on President Jacob Zuma’s desk, stakeholders have argued that its ratification is urgent, while others have warned about its Constitutional pitfalls.
But what is exactly is the FIC Bill?
The piece of legislation seeks to strengthen regulations that deal with money laundering and illicit financial transactions by bringing South Africa into line with standards set by the global Financial Action Task Force (FATF).
South Africa is a member of the FATF which is a policy-making body that works together with financial institutions worldwide to bring about reforms to counter unlawful financial operations.
As a member of FATF, South Africa would be expected to align its own financial legislation with FATF’s objections, which is what government is attempting to do through the FIC Bill.
The FIC Bill will therefore enable South Africa to counter money laundering, the international finance of terror and illicit cross-border flows of money.
The legislation also requires that banks conduct enhanced due diligence of politically exposed people in addition to current due diligence of all their customers.
In addition, the Bill introduces the notion of not just politically exposed persons but prominent influential persons, which includes those local and international people who do business with the state.
The legislation will lead to the scrutiny of all politicians and their family when using the banking system.
Detractors of the new legislation argue that South Africa is going beyond what is required in terms of the FATF regulations thereby undermining individuals’ constitutional rights to privacy and dignity.
But National Treasury and South Africa’s banking authorities have cautioned on several occasions that the longer the country delays signing the Bill into law the more South Africa is at risk of tarnishing its reputation as a regime with sound financial institutions.