CLOSE X
Advertisement

'SA banks at risk' over Fica Bill

Economy
London - A global group that monitors money laundering worldwide has expressed concern that a bill to fight the crime in South Africa faces “significant ongoing delays” and warned that the country’s banks risked being exposed to illicit money flows that could hurt investor sentiment.

David Lewis, executive secretary at the Paris-based Financial Action Task Force (FATF), said on Monday South Africa also risked being struck off its membership if it failed to pass the law in time for FATF’s next meeting in June.

Lewis told Reuters that South Africa could be sending the wrong signal worldwide on “the financial sector about the risks of business relationships involving South Africa”.

Tell a friend
File picture: Matthew Jordaan/Independent Media

In 2009, a FATF team recommended specific actions for South Africa after identifying a number of deficiencies. These included a lack of enforceable obligations for financial institutions to identify politically exposed persons.

“Effective action to mitigate the risk of corruption by politically exposed persons, as set out by the FATF standards, is extremely important, particularly in the context of Africa, where corruption has been recognised as a problem,” Lewis said.

The Financial Intelligence Centre Amendment Bill, which is required for local banks to remain part of the international banking system, has still not been signed into law, although it was first passed by the National Assembly in May 2016.

Last year, President Jacob Zuma sent it back to Parliament over concern about its constitutionality and its allowing searches without a court-approved warrant.

Read also: Need for urgency over Fica

Lawmakers voted for it and sent it back to Zuma for ratification in February, practically unchanged.

“Time is running out. And now we are saying one of the most effectual sectors in society, the financial sector, we want to weaken it, and it doesn’t make sense,” said Cas Coovadia, managing director at the Banking Association of South Africa.

Zuma has been lobbied by the Black Business Council not to sign the bill, saying it is unconstitutional.

A Presidency spokesperson said it would call back after checking with legal officers on reasons for the delay and when Zuma was expected to sign it.

The bill is meant to bolster the fight against global financial crime by making it easier to identify the ultimate owners of companies and accounts.

Tell a friend
Advertisement
X