Financial Intelligence Centre Act schedule amendments: finalisation

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Finance Standing Committee

30 August 2022
Chairperson: Mr J Maswanganyi (ANC)
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Meeting Summary

Video

Draft Amendments to Schedules 1, 2 and 3 Financial Intelligence Centre Act

Financial Intelligence Centre Act 2001 (Act No 38 of 2001)

Tabled Committee Reports

The Standing Committee on Finance considered the report on the amendments to Schedules 1, 2, and 3 to the Financial Intelligence Centre Act, 2001 (Act No 38 of 2001) submitted in terms of the Financial Intelligence Centre Act. The report discussed the briefing by National Treasury and the Financial Intelligence Centre, the consultation process undertaken, the summary of the amendments, the issues raised during the public hearings, and the Committee recommendations and observations.

The report was adopted with reservations from the DA and the FF+.

Meeting report

The Chairperson made the Committee aware that the IT team had challenges so they were not able to send Members the report in advance but they were able to compile the report.

Mr Zakhele Hlophe, Committee Content Advisor, apologised for the technical delay he experienced regarding sending out the report.

Committee Report on Financial Intelligence Centre Act schedule amendments

He took the Committee through the report. He provided background by stating that the Financial Intelligence Act gives the Minister of Finance the powers to amend the list of accountable institutions (Schedule 1), supervisory bodies (Schedule 2), and reporting institutions (Schedule 3) by adding, deleting or making technical changes to the list of persons and institutions listed in these Schedules.

The Act also provides that before the Minister does so, he/she must consult the Financial Intelligence Centre and the persons and institutions that will be affected.

He stated that when Parliament received these amendments, it considered the fact that there are going to be new sectors and institutions that are going to be regulated, and it would be prudent to engage in a process of public participation before it approves the amendment of these schedules. Public hearings were had and written proposals were sent by participants.

A number of issues were raised during the public hearings with National Treasury and the Financial Intelligence Centre. The comments were mainly on Schedule 1 of the Act, with institutions requesting to be excluded from the Act and the ambit of the regulations. Issues were raised on matters of compliance. On the Committee’s observations and recommendations, he highlighted that the Committee welcomes and approves these measures to improve the country’s compliance with the global standards against money laundering, terrorist financing and proliferation of weapons of mass destruction. The Committee believes that law enforcement agencies need to up their game in prosecuting financial crimes and pursuing illicit financial flows. The Committee is concerned about the delays in tabling the amendments to the FIC Act Schedules in Parliament for consideration and approval. The Committee however notes the introduction of the Financial Sector Laws Amendment Bills that will deal with the country’s deficiencies against money laundering and related activities. The Committee believes that the Minister of Finance and National Treasury needs to develop a risk strategy for mitigating the possible grey-listing of South Africa by FATF, and report this to the Committee in the next quarterly briefing.

Discussion

The Chairperson steered the discussion to the section (section 7) on the Committee’s observations and recommendations, starting with recommendation 7.1.

Mr I Morolong (ANC) and Ms M Mabiletsa (ANC) agreed to recommendation 7.1

The Committee considered recommendation 7.2. Mr Morolong agreed to this point.

Mr J de Villiers (DA) stated that his party, the Democratic Alliance, reserves its position on all the recommendations. The Chairperson noted this.

The Committee turned to recommendation 7.3. Ms Mabiletsa agreed to this recommendation.

Ms Mabiletsa agreed to recommendation 7.4.

Mr Morolong agreed to recommendation 7.5.

Ms Mabiletsa agreed to recommendation 7.6.

Mr Morolong agreed to recommendation 7.7.

Ms Mabiletsa moved for the adoption of the report and was seconded by Mr Mabiletsa.

The report was adopted.

Mr de Villiers re-emphasised the fact that the Democratic Alliance reserves its position on the adoption of the report.

Mr W Wessels (FF+) stated that the Freedom Front Plus also reserves its position on the adoption of the report.

Read Report:
ATC220830: Report of the Standing Committee on Finance on the Amendment of Schedule 1, 2 and 3 of the Financial Intelligence Centre Act, Act 38 of 2001, dated 30 August 2022

Other Matters

The Chairperson raised an issue before National Treasury and the Financial Intelligence Centre. Stakeholders raised an issue about the burden of compliance. This matter should not be ignored. The Committee wants the country to comply with the Financial Action Task Force (FATF) regulations but the burden of compliance should not be ignored. Businesses have gotten into serious problems in 2020 and ultimately ended up with about 2.5 million people losing their jobs. Now is not the time to ignore the issues raised by businesses. Can National Treasury commit to taking this matter seriously and working closely with stakeholders to ensure it gets the attention it deserves? As much as the Committee has international commitments as FATF members, it has national interests too.

Mr Vukile Davidson, Chief Director: Financial Sector Policy, stated that National Treasury takes the issues raised by the Chairperson very seriously. He assured the Committee that National Treasury would continue to ensure that the amendments are operationalised in a risk-based way in that the highest risks will get the most attention and therefore alleviate the compliance burden on small businesses that do not pose a significant risk. He agreed with the Chairperson and affirmed that National Treasury is working hard to achieve risk-based and proportional burdens.

The Chairperson replied that the mitigating considerations would be dealt with when the Committee deals with the Bill that is being tabled the next day. The Committee will make follow-ups once National Treasury has demonstrated how it will address the concerns raised by businesses.

The Chairperson thanked the Committee.

The meeting was adjourned.

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