financial intelligence centre republic of south africa

financial intelligence centre REPUBLIC OF SOUTH AFRICA

Synopsis of Financial Intelligence Centre

Amendment Bill and Centre’s views on implementation

6 MAY 2008

Tel: (012) 309 9200

Fax: (012) 309 9483

www.fic.gov.za

Amends definitions and introduces new definitions as consequence of other amendments effected by the Bill

New concept of bearer negotiable instrument introduced in accordance with international standards which require measures to detect physical cross-border transportation of currency and bearer negotiable instruments (Special Recommendation IX of the FATF)

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL

Clause 1 – Definitions

Interpretational aid in case of conflict between principal Act and any other law, other than the Constitution – provisions of the

principal Act will prevail.

This applies only with regard to matters that are dealt with in the principal Act.

Clause 2 – Application of the Act when in conflict with other laws

Extends objectives and functions of the Centre in relation to

supervision and enforcement of compliance with the provisions of the principal Act

provision of information collected by the Centre to supervisory bodies

Makes it clear that functions concerning supervision and enforcement of compliance with the provisions of the principal Act are to be performed in relation to institutions that are not regulated or supervised or where supervisory bodies do not supervise or enforce compliance with these provisions

Clauses 3 and 4 – Centre’s Objectives and Functions

Change of name to the Money Laundering Advisory Council –Counter-Money Laundering Advisory Council

Clauses 5 and 6 – Counter-Money Laundering Advisory Council

Amends section 26 of the principal Act to distinguish the proceeding in terms of this section relating to reports made in terms of section from the new inspection proceedings provided for in the Bill

Clause 7 – Centre’s access to records

Amends section 30 of the principal Act to include the reporting on the conveyance of bearer negotiable instruments in the requirement to report the conveyance of cash in excess of a prescribed threshold to or from the Republic

This will bring this provision in line with the current FATF Recommendations

Amends section 70 of the principal Act consequentially to add the words “or bearer negotiable instruments” wherever the word

“cash” occurs

Clauses 8 and 24 – Conveyance of cash to or from the Republic

Effects a technical amendment to section 34 of the principal Act by updating a reference to repealed legislation

Clause 9 – Intervention by the Centre

Amends sections 36 and 40 respectively to improve the provisions concerning the sharing of compliance related information among the Centre, supervisory bodies and law enforcement agencies

Clause 10 and 11 – Disclosure of information

Introduces a new provision that will enable the Centre and supervisory bodies to issue directives

Directives may deal with application of the principal Act by accountable institutions or categories of accountable institutions

Directives may require specific accountable institutions orcategories of accountable institutions to:

provide information, reports or statistical returns

cease any conduct in contravention of the principal Act

perform acts necessary to remedy non-compliance with the principal Act

perform acts necessary to meet any obligation imposed by the principal Act

Clause 12 – Directives (Section 43A)

Introduces a new provision that will require every accountable institution and every reporting institution to register with the Centre

This will enable the Centre to obtain improved information of the number of institutions that fall within the ambit of the principal

Act and details about those institutions such as the type of business being conducted and the physical address

The registration process does not amount to a licensing provision and accordingly it will not present any bar to an institution from carrying on the business of an accountable institution or

reporting institution

Clause 12 – Registration by accountable institutions and reporting institutions (Section 43B)

Amends section 45 of the principal Act in a number of respects:

Expressly adds the responsibility to supervise compliance with the principal Act to the functions of all supervisory bodies

Provides supervisory bodies with a range of powers, in addition to existing powers they may have in terms of other legislation:

to conduct inspections in relation to compliance with the principal Act

to impose conditions to qualify for licenses etc.

to take a person’s involvement in money laundering or terrorist related activities into account in respect of “fit and proper” tests

Clause 13 – Responsibility for supervision of accountable institutions

Introduces new provisions to enable the Centre and supervisory bodies to appoint inspectors and to conduct inspections in

respect of compliance with the provisions of the principal Act

Introduces powers that may be exercised during an inspection e.g:

directing a person to appear for questioning

entering and inspecting the premises where an institution or person conducts business

using a computer system on the premises to access records

Clause 14 – Inspections (Sections 45A and 45B)

Introduces a range of administrative penalties that may be applied in relation failures to comply with the principal Act

Include one or a combination of the following:

a caution not to repeat a particular conduct

a reprimand

a directive to take a remedial or particular action or make any arrangements or cease a particular action

restriction or suspension of certain specified business activities

a monetary penalty not exceeding R10 000 000 in respect of natural persons and R50 000 000 in respect of legal persons

Clause 14 – Administrative sanctions(Section 45C)

Provides for an appeal process including the establishment of a Board of Appeal to consider the actions taken by the Centre and supervisory bodies

Board consists of as many persons as the Minister of Finance considers necessary, with the chairperson being an advocate or attorney with at least ten years experience

Centre is charged with the provision of administrative support to the Board

Clause 14 – Appeal (Sections 45D and 45E)

Empowers Centre and supervisory bodies to

institute proceedings in the High Court compelling an accountable institution to comply with any provision of the

principal Act or to cease contravening a provision of the Act

apply to a court for an order restraining an accountable institution from continuing business pending an application to court

Clause 14 – Application to Court (Section 45F)

Create new offences and amend existing offence provisions of the principal Act to provide for contraventions of new provisions and for offences that have been omitted previously

Clauses 15 to 23 – Offences

Effects a consequential amendment to the Index of the principal Act

Clause 25 – Amendment of Index

Effects consequential amendments to the Long Title of the principal Act

Clause 26 – Amendment of Long Title

INSPECTORATE

Types of inspections:

Routine inspections / compliance examinations

Thematic inspections

Inspections in respect of specific concerns

Routine and thematic inspections to be undertaken in terms of inspection plans to be developed by Inspectorate

Inspection manuals to be developed for different types of inspections

IMPLEMENTATION OF FIC ACT AMENDMENTS

INSPECTORATE

Preparation includes:

inspection manuals

budgeting

recruitment

training

Systems to identify sectors and institutions for inspection plans

Interaction with supervisory bodies

INSPECTORATE

Inspectorate section within Centre’s structure

Start with small number of inspectors (± 3 inspectors) and increase capacity incrementally over five years

Initially draw on part-time availability of existing staff

INSPECTORATE

Envisaged timeframes

Process development (including inspection manuals etc.) currently underway

Enhancing capacity of existing staff currently underway

Budgeting currently underway

Recruitment starting May 2009

Training starting June 2009

Ready to commence with inspections from August 2009

ADMINISTRATIVE SANCTIONS

Internal decision making processes

Capacity for vetting of inspection process, review relevant information and advise on appropriate action

Processes to support actions of supervisory bodies

Guidelines and training on effective use of sanctions

Processes for monitoring effect of sanctions

ADMINISTRATIVE SANCTIONS

Process development currently underway

Enhancing capacity of existing staff currently underway

Training starting May 2009

Ready to commence from August 2009

APPEAL BOARD

Infrastructure for Board and secretariat

Budgeting

Identify candidates for Board

APPEAL BOARD

Process appointments for Minister

Internal structure for secretariat

Recruit staff for secretariat

APPEAL BOARD

Process development currently underway

Infrastructure planning currently underway

Budgeting currently underway

Recruitment for secretariat starting May 2009

Training for secretariat starting June 2009

Identify and appoint members starting May 2009

Ready to commence from August 2009

OTHER PROCESSES

Schedule of supervisory bodies

Update references

Remove inappropriate bodies

Include new/additional bodies

Co-ordination / demarcation between supervisors

MOUs / other formal arrangements

Interaction with other authorities

Networks / gateways for sharing of information

ENDCONTACT DETAILS

NATIONAL TREASURY

Nkosana MashiyaChief Director: Economic Policy and International Financial

Relationsnkosana.mashiya@treasury.gov.za

Tel: (012) 315 5825

Jo-Ann FerreiraChief Director: Public Entities Governance Unit

Jo-Ann.Ferreira@treasury.gov.zaTel: (012) 315 5263

Raadhika SookooDirector: Economic Policy and International Financial

Relationsraadhika.sookoo@treasury.gov.za

Tel: (012) 315 5671FINANCIAL INTELLIGENCE CENTRE

Murray MichellDirector: Financial Intelligence Centre

murray.michell@fic.gov.zaTel: (012) 309 9210

Pieter SmitSenior Manager: Legal and Policy

pieter.smit@fic.gov.zaTel: (012) 309 9215

Poovindree NaidooSenior Legal and Policy Advisorpoovindree.naidoo@fic.gov.za

Tel: (012) 309 9423

financial intelligence centre republic of south africa

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