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South Africa’s Decided Move to Strengthen Anti-Money Laundering Laws

South Africa has taken a decisive step toward addressing financial crimes and enhancing its global standing in combating illicit activities. The draft General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill, 2024, aims to refine the nation’s regulatory framework and align it with international standards. This move comes at a critical time as the country seeks to exit the Financial Action Task Force (FATF) greylist and solidify its reputation as a secure financial environment.

Key Amendments in the Anti-Money Laundering Bill

The draft bill, published in the Government Gazette on December 13, 2024, seeks to tackle deficiencies identified by FATF during its 2021 evaluation. Developed collaboratively by the National Treasury, the Department of Trade, Industry and Competition, the Department of Social Development, and the Financial Intelligence Centre, the proposed legislation introduces amendments to four critical laws:

The Financial Intelligence Centre Act, 2001 (FIC Act): Enhancements address deficiencies in targeted financial sanctions and customer due diligence for anonymous clients. Updates also cover new technologies, ensuring compliance with global standards.
The Financial Sector Regulation Act, 2017: The bill proposes stronger licensing and enforcement powers, along with measures to protect financial sector customers and close regulatory gaps.
The Companies Act, 2008: Changes focus on enforcing beneficial ownership obligations and implementing proportional sanctions for non-compliance.
The Nonprofit Organisations Act, 1997: Updates clarify penalties for offences and aim to prevent misuse of nonprofit entities for illicit activities.

By addressing these areas, the draft bill demonstrates South Africa’s commitment to creating a robust framework for tackling financial crimes.

Enhancing Compliance to Exit the FATF Greylist

Exiting the FATF greylist is a priority for South Africa. The draft bill is a direct response to recommendations made during the 2021 FATF mutual evaluation. According to the National Treasury, these amendments are crucial for South Africa’s readiness for the next evaluation in 2026/27.

The greylist, a designation for countries with strategic deficiencies in their anti-money laundering (AML) and combating the financing of terrorism (CFT) measures, can impact a nation’s economy and international reputation. South Africa’s placement on the list has increased scrutiny on its financial transactions and raised compliance costs for local businesses.

In a statement, the National Treasury emphasized, “The draft amendment bill aims to demonstrate South Africa’s commitment to strengthening its AML/CFT system by addressing the remaining deficiencies identified by FATF…and better preparing South Africa for the next mutual evaluation.”

The Role of Public Participation in Shaping the Bill

Public engagement plays a pivotal role in refining the draft bill. Stakeholders are encouraged to submit their written comments to the National Treasury by February 6, 2025. Following this, workshops will be organized to facilitate discussions and address concerns raised by the public.

This collaborative approach ensures that the final version of the bill reflects a comprehensive understanding of the challenges and solutions required to combat financial crimes effectively. The National Treasury, along with other involved departments, will use this feedback to finalize the draft before presenting it to Parliament.

Conclusion: A Step Toward Financial Security

The General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill, 2024, represents a crucial step in South Africa’s journey toward financial security and international compliance. By addressing regulatory gaps and involving public feedback, the country is taking proactive measures to strengthen its financial system and regain global trust.

Stakeholders and citizens alike are encouraged to participate in shaping this landmark legislation. As South Africa moves forward, the success of this initiative will depend on collective efforts to create a resilient and transparent financial ecosystem.