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Treasury Heeds FICA Criticism

Legalbrief Today reported on Thursday on the National Treasury’s response to criticism that certain aspects of the proposed amendments to the Financial Intelligence Centre Act are impractical and too onerous.

Quoting from a Business Day report, it says that there were five main contentious issues:

  • the requirements on record keeping;
  • transitional arrangements;
  • the obligation on accountable institutions to identify the beneficial owners of the companies,
  • trusts and other entities with which they transact;
  • the need to apply enhanced surveillance over the accounts of prominent influential persons, and the provisions for a risk-based approach to surveillance.

The Banking Association SA (Basa) also raised its concern about the provisions in the Bill which require that banks give special scrutiny to politically influential individuals. The association’s MD, Cas Coovadia, said the definitions in this section of the Bill were far too wide and unclear and there were practical challenges as to how it would be implemented. Banks were willing to ensure that they were not complicit in illegal activities by exercising greater scrutiny over such individuals but it had to be practical.

Coovadia also noted that, while the amendment Bill provided for a risk-based approach, it prescribed more onerous and detailed requirements for customer due diligence for all categories of individuals. ‘This defeats the objective of a risk-based approach,’ he said.

Treasury’s Olano Makhubela said that a broader definition had been proposed to give recognition to the fact that public figures had counterparts in the private sector who also required greater scrutiny. Prominent influential persons would include top government officials, from the country’s President all the way down to municipal managers, as well as company chairpersons, CEOs and chief financial officers. The definition also includes the immediate family, partners and close associates of such individuals.

While open to further engagements and willing to offer compromise solutions in some areas, Treasury was insistent the law had to embody the basic, globally accepted principles of sound financial management.

Discussions would continue with the business sector on some of the major concerns raised during the committee’s public hearings on the amendment Bill.

All the latest developments regarding FICA will be discussed at the Moonstone/Webber Wentzel Regulatory Update workshops in February and March.

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