Cape Town – Scrapping the Financial Intelligence Centre (FIC) Bill, as suggested by two black business groups in Parliament on Wednesday, will have a disastrous effect on South Africa, National Treasury has warned.
Ismail Momoniat, who represented National Treasury during public hearings into the FIC Bill on Wednesday, made an impassioned plea to MPs to consider the impact if the Bill is not signed into law.
He said not complying with international standards of the Financial Action Task Force (FATF) will lead to punitive action from the international financing community that will have the same effect as a ratings downgrade, as it will increase the likes of borrowing costs.
The Standing Committee on Finance invited interested groups to make representations on Wednesday about President Jacob Zuma’s constitutional reservations regarding the piece of draft legislation.
In November last year, Zuma referred the FIC Bill, which had been on his desk for several months, back to the National Assembly, because he was concerned that the provision for warrantless searches wouldn’t pass constitutional muster.
Two members of senior counsel however – advocate Ishmael Semenya and Jeremy Gauntlett – assured MPs that the specific provision was indeed constitutional.
The most vocal protesters of the Bill were the Black Business Council (BBC) and the Progressive Professionals Forum.
Objections to the Bill
The two organisations’ submissions to Parliament were by and large similar as they centred mainly on concerns that African people will fall victim to the term politically exposed people (PEPs) and that their constitutional right to freedom and dignity will be infringed upon as a result.
The BBC’s Danisa Baloyi, in her submission, claimed that hardworking, honest black business people have had their accounts closed by banks who refuse to provide any reasons for doing so.
“Then these businesses are told to go to court, but on what grounds can they do this if they don’t even know the reasons?”
PPF President Mzwanele Manyi said during the deliberations that he was of the view that the FIC bill, once signed into law, will lead to a crisis in the country and that he will call upon Zuma to not ratify the bill.
“Why are we arguing about a Bill here that will plunge the country in crisis,” Manyi asked.
During question time, ANC MP Makhosi Khoza told the BBC and PPF that the issues they had raised in their representations were substantive ones, but that they should have done so during Parliament’s deliberation process last year.
She asked the two organisations to suggest steps going forward, to which Manyi responded that the bill should be scrapped in its entirety.
Yunis Carrim (ANC), chairperson of the Standing Committee on Finance, on Tuesday allowed stakeholders to make representations beyond the strict terms of Zuma’s referral to much criticism from Floyd Shivambu from the EFF.
Shivambu repeatedly asked Carrim during deliberations about why he was allowing organisations such as the BBC and PPF to deviate from the narrow referral of Zuma’s concerns about warrantless searches.
'Financial sector must transform'
Carrim defended his stance, saying it was MPs’ duty to be a Parliament of the people and take all submissions into account.
“We’ll be back in the Constitutional Court if we don’t give attention to the problematic sections in this Bill,” he said.
Meanwhile, Parliament’s senior legal advisor advocate, Frank Jenkins, will have his work cut out for him when he scrutinises the various points raised in the submissions.
Carrim asked Jenkins to summarise the points made that specifically pertain to Zuma’s reservation about the constitutionality of warrantless searches.
The other points raised, such as concerns about the term politically exposed persons and the “extensive powers of the FIC”, will be referred to a public hearing, which will take place on March 14.
Carrim said it was high time that the financial sector in South Africa transforms economically to become more inclusive – an issue that will receive attention during the March public hearings.Read Fin24's top stories trending on Twitter: Fin24’s top stories